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Learning, Sharing, and Teaching => Investor Alley => Topic started by: mrpercentage on April 15, 2015, 01:13:49 AM

Title: Can't beat an Index
Post by: mrpercentage on April 15, 2015, 01:13:49 AM
Uh.. no timing needed really just in and hold on like you would an index. They even have yields. Im not saying everything folks. Im saying Im in my 30's 30%
you might need to read some fundamentals each quarter to see if she'll stop bucking but I think you will be safe this year. It gets really obscene if you push it out to forever. Like 25,000% obscene
(http://i820.photobucket.com/albums/zz124/azwolf25/Screen%20Shot%202015-04-15%20at%2012.01.24%20AM.jpg) (http://s820.photobucket.com/user/azwolf25/media/Screen%20Shot%202015-04-15%20at%2012.01.24%20AM.jpg.html)
Title: Re: Can't beat an Index
Post by: mrpercentage on April 15, 2015, 01:43:49 AM
Im just a regular guy, so what do I know but...
Apple is being called a value stock because its so @##$$ big that people are afraid to invest for the long term.
Personally I lean towards Disney it is a little less Holy Shit on growth.

Im 23% Disney 7% Apple. My plan is 30% minus 2% for every year over 35 in stocks. Im not ivy league, but my gut says Bingo!
Im calling it.. you can scream at me next April, or you can face palm. Only time will tell
Title: Re: Can't beat an Index
Post by: forestbound on April 15, 2015, 08:30:11 AM
Word of caution, IBM used to be a "can't lose" stock. There really is no such thing. The new watch, well I have my skepticism.

That being said Apple was the first stock I snatched up during the Great Recession and it has done wonders for my portfolio. I won't buy any more, I have enough, not nearly 7% of my portfolio. I do make money using Apple products, been working on Macs for over 20 years. They rock!


Title: Re: Can't beat an Index
Post by: SuperSecretName on April 15, 2015, 08:34:32 AM
geez, talk about cherry picking data.

yeah, apple will be great.  until it isn't anymore.
Title: Re: Can't beat an Index
Post by: GuitarStv on April 15, 2015, 08:48:46 AM
All indicators showed that the pumpkin stock I bought near the end of October would be an unstoppable Juggernaut.  I was disappointed with performance in November.
Title: Re: Can't beat an Index
Post by: Dodge on April 15, 2015, 10:41:10 AM
Uh.. no timing needed really just in and hold on like you would an index. They even have yields. Im not saying everything folks. Im saying Im in my 30's 30%
you might need to read some fundamentals each quarter to see if she'll stop bucking but I think you will be safe this year. It gets really obscene if you push it out to forever. Like 25,000% obscene
(http://i820.photobucket.com/albums/zz124/azwolf25/Screen%20Shot%202015-04-15%20at%2012.01.24%20AM.jpg) (http://s820.photobucket.com/user/azwolf25/media/Screen%20Shot%202015-04-15%20at%2012.01.24%20AM.jpg.html)

No timing needed?  Tell that to the person who bought in AAPL 1980 and underperformed the market for 26 years.

(http://i.imgur.com/ZupBW2o.png)

(http://i.imgur.com/tF4ttQi.jpg)
Title: Re: Can't beat an Index
Post by: surfhb on April 15, 2015, 11:31:40 AM
geez, talk about cherry picking data.

yeah, apple will be great.  until it isn't anymore.

Yeah....no kidding!    Rolling eyes*
Title: Re: Can't beat an Index
Post by: theoverlook on April 15, 2015, 02:20:54 PM
I had a blind friend that loved to say: "Hindsight is 20/20 even if you're legally blind."

This is the definition of hindsight, and "past results are not indicative of future performance."  As therivler1 says, it'll be great until it isn't.
Title: Re: Can't beat an Index
Post by: Indexer on April 15, 2015, 05:01:04 PM
Check the fundamentals...

What fundamentals did Apple have... EVER... that suggested it would do what it did?

It made computers in the 80s.  Then it got %^$ raped by Microsoft for a couple decades.  It fired its founder/CEO.  He went on to start another successful company.  Then it made goofy colored bubble looking computers that had 1 highlight in their entire existence.
(http://www.blearyboy.com/wp-content/uploads/2015/02/files_inside_the_computer.jpg)

Then when they learned they were just as unsuccessful after firing that old CEO as they were before firing him... they hired him back.

Then they started getting programs from Microsoft... the same company that raped them... because otherwise no one would buy their computers.  Then they invented a mini computer that played music.  It was the biggest breakthrough in.... really... its not that impressive.  Hard drive+speakers=more music than a CD player.  What is sad is it took that long for someone to put the two together.

Then they had project purple.  At the time only a dozen or so people in the whole world new about it.  At the time I was in college and my technology professor was going on about how phones would eventually become computers that would revolutionize our lives because they would be able to do just about anything we needed.  Everyone assumed the blackberry would just keep getting better.  And then there was the iPhone.  Fundamentals didn't mean squat.  Unless you were one of those few people on project purple you were just dumb lucky to have owned Apple before it took off. 
Title: Re: Can't beat an Index
Post by: mrpercentage on April 15, 2015, 05:23:03 PM
I never said I new to invest in it back then, but I did say you could jump in now without timing didn't I.
Context.. granted what I am doing is more "dangerous". We will see next April.
Im on the hook.. its quoted right here 23% Disney 7% Apple for me. Nothing to say about Disney though huh.. cause you buy and hold that shit period. Now that Apple joined the DOW its an incredibly dangerous company getting a 70% return rate. Just saying
Title: Re: Can't beat an Index
Post by: mrpercentage on April 15, 2015, 05:27:25 PM
I forgot to mention that many eft's have as much as 5% Apple. You are buying it and not even knowing it. Read the holdings

Here is QQQ the Power is this Power share is Apple big guy 15% Apple


(http://i820.photobucket.com/albums/zz124/azwolf25/Screen%20Shot%202015-04-15%20at%204.45.40%20PM.jpg) (http://s820.photobucket.com/user/azwolf25/media/Screen%20Shot%202015-04-15%20at%204.45.40%20PM.jpg.html)
Title: Re: Can't beat an Index
Post by: skyrefuge on April 15, 2015, 07:33:37 PM
Uh.. no timing needed really just in and hold on like you would an index. They even have yields. Im not saying everything folks. Im saying Im in my 30's 30%
you might need to read some fundamentals each quarter to see if she'll stop bucking but I think you will be safe this year. It gets really obscene if you push it out to forever. Like 25,000% obscene

Uh, what? I don't mean to alarm you, but you may be having a stroke.

Im on the hook.. its quoted right here 23% Disney 7% Apple for me. Nothing to say about Disney though huh.. cause you buy and hold that shit period. Now that Apple joined the DOW its an incredibly dangerous company getting a 70% return rate. Just saying

Ah, well, you're still alive 14 hours later, so hopefully it wasn't a stroke after all. You're still making no sense though. I'm unclear on how joining the DOW (stands for "Dangerous Operators Watchout!" I suppose?) jacked up Apple's dangerosity burners to 70% something something, but I will heed your astute analysis and buy myself some Apple stock!

Oh, except I was already aware that I own a buttload of Apple in my index funds. That's not exactly news to people who know anything about investing.

This Disney company though...you say they have this thing called STAR WARS? Hmm, I've never heard of that. And probably no one else has either, but if you have your ear to the ground and somehow know that it's something that a few people will care about, then you're probably going to make billions based on that secret knowledge!

Seriously, if your current level of knowledge is anywhere near what it appears to be from your posts, I strongly recommend that you stop picking individual stocks before you hurt yourself.
Title: Re: Can't beat an Index
Post by: Dodge on April 15, 2015, 08:10:11 PM
Seriously, if your current level of knowledge is anywhere near what it appears to be from your posts, I strongly recommend that you stop picking individual stocks before you hurt yourself.

Agreed, he reminds me of this guy:

(http://i.imgur.com/FlGJea2l.png)

Mrpercentage, I implore you.  Stop what you're doing and read some investment books.  A Random Walk Down Wall-Street (http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393340740/ref=dp_ob_title_bk), or The Bogleheads' Guide to Investing (http://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/1118921283/ref=sr_1_1?s=books&ie=UTF8&qid=1429150180&sr=1-1&keywords=bogleheads) would be a good start.
Title: Re: Can't beat an Index
Post by: mrpercentage on April 15, 2015, 08:34:06 PM

Seriously, if your current level of knowledge is anywhere near what it appears to be from your posts, I strongly recommend that you stop picking individual stocks before you hurt yourself.

I told you I was just a guy. I probably should shut up. So I will. Finances are very personal. Im just not sure if I buy absolute diversity. It's very anti Neitzche. I see the general response here is of absolute index. God forbid you buy a company for a year or two and make a profit without paying someone else.. even if its just 0.35%

You can't learn how to have good ideas by the way. You either have them or don't. You can hedge against bad ones, and you guys are masters of that. I do respect that.

Perhaps I didn't come across right either. Im really bouncing around my ideas. Im not trying to preach but now see how it could come across that way. Is AAPL and Disney a bad call? I have been playing with other ideas with small purchases at Robinhood and am doing well, but have heard a bull market makes many a sage.
Title: Re: Can't beat an Index
Post by: tj on April 15, 2015, 11:09:15 PM
If Apple tanks, anyone holding a cap weighted index is going to get creamed too.
Title: Re: Can't beat an Index
Post by: boarder42 on April 16, 2015, 06:31:20 AM
I forgot to mention that many eft's have as much as 5% Apple. You are buying it and not even knowing it. Read the holdings

Here is QQQ the Power is this Power share is Apple big guy 15% Apple


yeah but we're not only buying it.  no one here is advocating dont buy apple i'm perfectly happy owning a small percentage of it.
Title: Re: Can't beat an Index
Post by: matchewed on April 16, 2015, 07:30:30 AM
I forgot to mention that many eft's have as much as 5% Apple. You are buying it and not even knowing it. Read the holdings

Here is QQQ the Power is this Power share is Apple big guy 15% Apple


Um... pretty sure that we do know it. We're not stupid here. Knowing what an index is and is comprised of is part of knowing why they work so well.

I think if you want to select individual companies and accept that risk you are welcome to it. But acknowledge the risk and don't play it off as some miracle investment that guarantees a better performance consistently. It is possible to make money with going with individual companies (link). (http://www.joshuakennon.com/eastman-kodak-example/) But why do you think you can pick the winner? As others have said, read some books about investing, educate yourself on investing, and then after that if you still feel you can pick the winners feel free. In the meantime stick with index investing as it has a good balance between risk and reward.

Title: Re: Can't beat an Index
Post by: mrpercentage on April 16, 2015, 08:25:58 AM
You guys don't seem to be able to see humor, understand what I am saying, and repeat each other's criticism.
1. AAPL isn't a miracle investment-- its the investment everyone is investing in anyway so Im removing the ETF rubber you are all using
2. I mentioned the DOW because that shows relative safety while displaying my smart ass nature.
3. Most of the people I know buy ETF's precisely because they don't want to pick stocks.
4. The bullshit diversification everyone displays is more reckless than mine. Im about 50% AMECX @NAV.. I own less AAPL than probably 90% of you. That biggest holding is 3% each of Merc and Microsoft.
5. Im not having a fucking stroke google finance AAPL and hit the fucking ALL key 25,000%
6. whatever... I listened to enough quotes of people who half read my post and pasted the opinion they completely absorbed from someone elses actual footwork.
7. I will accept the risk and more, all of life is one.

Thanks for your wisdom and understanding
Title: Re: Can't beat an Index
Post by: brooklynguy on April 16, 2015, 08:34:39 AM
You guys don't seem to be able to see humor...

...Im not having a fucking stroke

Anyone who did not see the humor in skyrefuge's comments must be entirely devoid of a sense of humor.  They had me in such a fit of comical hysteria they almost gave me a stroke.
Title: Re: Can't beat an Index
Post by: theoverlook on April 16, 2015, 08:56:44 AM
Then it made goofy colored bubble looking computers that had 1 highlight in their entire existence.
(http://www.blearyboy.com/wp-content/uploads/2015/02/files_inside_the_computer.jpg)

Then when they learned they were just as unsuccessful after firing that old CEO as they were before firing him... they hired him back.


Uhh, you might want to check your timeline there.  The "goofy colored bubble" computers were the first product launched under Jobs, were seen as revolutionary in a sea of beige, were enormously successful, and saved Apple from financial ruin.

Not going to argue against the rest of your points.
Title: Re: Can't beat an Index
Post by: wtjbatman on April 16, 2015, 09:37:12 AM
(http://www.thetanooki.com/wp-content/uploads/2010/07/NBA-Jam-Screen.png)
Title: Re: Can't beat an Index
Post by: frugalnacho on April 16, 2015, 10:01:44 AM
All indicators showed that the pumpkin stock I bought near the end of October would be an unstoppable Juggernaut.  I was disappointed with performance in November.

Simpsons did it.

Quote from: Homer's Broker
Homer, you knuckle-beak, I told you a hundred times: you've got to sell your pumpkin futures before Hallowe'en! Before!

(https://c1.staticflickr.com/3/2273/2352092104_36202e78d0.jpg)
Title: Re: Can't beat an Index
Post by: GuitarStv on April 16, 2015, 11:40:02 AM
:O
Title: Re: Can't beat an Index
Post by: Indexer on April 16, 2015, 04:19:49 PM
Then it made goofy colored bubble looking computers that had 1 highlight in their entire existence.
(http://www.blearyboy.com/wp-content/uploads/2015/02/files_inside_the_computer.jpg)

Then when they learned they were just as unsuccessful after firing that old CEO as they were before firing him... they hired him back.


Uhh, you might want to check your timeline there.  The "goofy colored bubble" computers were the first product launched under Jobs, were seen as revolutionary in a sea of beige, were enormously successful, and saved Apple from financial ruin.

Not going to argue against the rest of your points.

I had a feeling I got that backwards, but then it occurred to me... does it matter?  No one cared at the time. :)
Title: Re: Can't beat an Index
Post by: skyrefuge on April 16, 2015, 04:55:11 PM
Then they invented a mini computer that played music.  It was the biggest breakthrough in.... really... its not that impressive.  Hard drive+speakers=more music than a CD player.  What is sad is it took that long for someone to put the two together.

And while we're correcting false histories here, this one is also wrong. Several companies were selling hard-drive-based mp3 players before Apple did. http://en.wikipedia.org/wiki/Portable_media_player#History

Besides the iPhone (whose keyboardless interface *was* unique at the time), most other things Apple wants you to believe it invented (iPod, iPad, big iPhone, Apple Watch) have really just been things that it has marketed more successfully than earlier companies did.
Title: Re: Can't beat an Index
Post by: Indexer on April 16, 2015, 05:20:35 PM
Then they invented a mini computer that played music.  It was the biggest breakthrough in.... really... its not that impressive.  Hard drive+speakers=more music than a CD player.  What is sad is it took that long for someone to put the two together.

And while we're correcting false histories here, this one is also wrong. Several companies were selling hard-drive-based mp3 players before Apple did. http://en.wikipedia.org/wiki/Portable_media_player#History

Besides the iPhone (whose keyboardless interface *was* unique at the time), most other things Apple wants you to believe it invented (iPod, iPad, big iPhone, Apple Watch) have really just been things that it has marketed more successfully than earlier companies did.

There was even a phone that played Mp3s before the iPod, but it wasn't famous and I didn't feel like getting to far into the weeds.  I mean if we are correcting history.... Apple never invented anything.  They stole the whole idea for a personal computer.  If Xerox had bothered to copyright the thing Apple wouldn't even be a company... and likely neither would Microsoft.
Title: Re: Can't beat an Index
Post by: aspiringnomad on April 16, 2015, 07:52:30 PM
Then they invented a mini computer that played music.  It was the biggest breakthrough in.... really... its not that impressive.  Hard drive+speakers=more music than a CD player.  What is sad is it took that long for someone to put the two together.

And while we're correcting false histories here, this one is also wrong. Several companies were selling hard-drive-based mp3 players before Apple did. http://en.wikipedia.org/wiki/Portable_media_player#History

Besides the iPhone (whose keyboardless interface *was* unique at the time), most other things Apple wants you to believe it invented (iPod, iPad, big iPhone, Apple Watch) have really just been things that it has marketed executed more successfully than earlier companies did.

FTFY. Otherwise I don't disagree. Thankfully for shareholders (including indexers) executing better than anyone else happens to be a profitable and not easily replicable business model.
Title: Re: Can't beat an Index
Post by: skyrefuge on April 16, 2015, 10:35:53 PM
There was even a phone that played Mp3s before the iPod, but it wasn't famous and I didn't feel like getting to far into the weeds.

Naw, I'm too much of an jerk to let you weasel out of that one. If you had simply said "they invented a mini computer that played music", I wouldn't have batted an eyelash. But you doubled-down, explicitly stating (with amazement) that they were the first to consider connecting a hard drive and speakers. It's ok, I'm an old man. It sounds like you weren't around to see my friend's ugly-ass Archos monstrosity, so no one expects you to know ancient history. But that's no excuse to go around making it up!

Besides the iPhone (whose keyboardless interface *was* unique at the time), most other things Apple wants you to believe it invented (iPod, iPad, big iPhone, Apple Watch) have really just been things that it has marketed executed more successfully than earlier companies did.

FTFY. Otherwise I don't disagree. Thankfully for shareholders (including indexers) executing better than anyone else happens to be a profitable and not easily replicable business model.

Edit accepted. Inasmuch as "marketing" is a subset of "execution". And yeah, even if marketing was the only part of their execution that mattered (I agree that it's not), as a shareholder I'd still be totally onboard with that.
Title: Re: Can't beat an Index
Post by: Dodge on April 16, 2015, 11:46:31 PM
There was even a phone that played Mp3s before the iPod, but it wasn't famous and I didn't feel like getting to far into the weeds.

Naw, I'm too much of an jerk to let you weasel out of that one. If you had simply said "they invented a mini computer that played music", I wouldn't have batted an eyelash. But you doubled-down, explicitly stating (with amazement) that they were the first to consider connecting a hard drive and speakers. It's ok, I'm an old man. It sounds like you weren't around to see my friend's ugly-ass Archos monstrosity, so no one expects you to know ancient history. But that's no excuse to go around making it up!

Besides the iPhone (whose keyboardless interface *was* unique at the time), most other things Apple wants you to believe it invented (iPod, iPad, big iPhone, Apple Watch) have really just been things that it has marketed executed more successfully than earlier companies did.

FTFY. Otherwise I don't disagree. Thankfully for shareholders (including indexers) executing better than anyone else happens to be a profitable and not easily replicable business model.

Edit accepted. Inasmuch as "marketing" is a subset of "execution". And yeah, even if marketing was the only part of their execution that mattered (I agree that it's not), as a shareholder I'd still be totally onboard with that.

Yup, I had one of those!  Was hoping someone would speak up and remind everyone that Apple didn't invent the mp3 player.  Actually, I remember telling my friends that the iPod was more expensive, and had less storage than my amazing Archos:

(http://ecx.images-amazon.com/images/I/41JPEBVFCPL.jpg)
Title: Re: Can't beat an Index
Post by: Scandium on April 17, 2015, 07:45:26 AM
Uh.. no timing needed really just in and hold on like you would an index. They even have yields. Im not saying everything folks. Im saying Im in my 30's 30%
you might need to read some fundamentals each quarter to see if she'll stop bucking but I think you will be safe this year. It gets really obscene if you push it out to forever. Like 25,000% obscene

WTF? Are these sentences or the ramblings of a mental patient? You're in your 30s 30%? So you're 10 years old?
" no timing needed really just in and hold on"
ehh, that's what she said..?
Title: Re: Can't beat an Index
Post by: YoungInvestor on April 17, 2015, 08:10:38 PM
Yes, of course it's easy, beating the market.

All you had to do was buy 1000$ worth of MSFT in 1986, sell it on the last trading day of 1999, wait a year and move on to AAPL in January 2001. Should have been enough to make you a deca-millionaire today.

Heck, while we're at it, you might as well have bought some puts on MSFT with the money you had before initiating your AAPL position. Should put you in the hundred-millionaire club fairly easily.

The point I'm trying to make here is that MSFT wasn't obvious in 1986, just like AAPL wasn't obvious in 2001.

People in 2030 might look at us and complain about how idiotic we are not to be investing in company XYZ while we have a chance to. Unless you can give me that company's name (heck, I'll settle for the sector and exchange it trades on), there's not much I can do but hold a wide variety of stocks (through an index fund, as an example).
Title: Re: Can't beat an Index
Post by: VanTran on April 17, 2015, 11:47:35 PM
You don't have to hit the jackpot to beat the market. In the past 5 years, you could've just bought a leveraged index ETF, held for a year, then switch to an index fund. Boom,you've beaten the market for life. Mystery solved.

Yes, of course it's easy, beating the market.

All you had to do was buy 1000$ worth of MSFT in 1986, sell it on the last trading day of 1999, wait a year and move on to AAPL in January 2001. Should have been enough to make you a deca-millionaire today.

Heck, while we're at it, you might as well have bought some puts on MSFT with the money you had before initiating your AAPL position. Should put you in the hundred-millionaire club fairly easily.

The point I'm trying to make here is that MSFT wasn't obvious in 1986, just like AAPL wasn't obvious in 2001.

People in 2030 might look at us and complain about how idiotic we are not to be investing in company XYZ while we have a chance to. Unless you can give me that company's name (heck, I'll settle for the sector and exchange it trades on), there's not much I can do but hold a wide variety of stocks (through an index fund, as an example).
Title: Re: Can't beat an Index
Post by: mrpercentage on April 18, 2015, 09:01:52 AM
The definition of a weenie is someone who tries argue semantics and make up the definition of every word to match his own confirmation bias. Lot of Apple haters out there. Got a whole lot of Apple is a bunch of thieves.. and I hate apple because I can't get the shitty free music I didn't pay for unless I jailbreak it but then it would become like droid and get music herpies. Seriously, its the biggest complaint I here about Apple. Bill Gates wrote Office for Apple and gave them money that means its all Microsoft.. Waa!! Apple is consistent in their programming so people don't have to completely relearn in every 5 years-- thats bullshit!! They can't do that!!

None of that has to do with technical analysis or even a big world view.
None of it has to do with Apple making you money.
I will ride your stupid ETF's on actual Apple stock while maintain better diversity.

Title: Re: Can't beat an Index
Post by: Indexer on April 18, 2015, 01:56:29 PM
The definition of a weenie is someone who tries argue semantics and make up the definition of every word to match his own confirmation bias. Lot of Apple haters out there. Got a whole lot of Apple is a bunch of thieves.. and I hate apple because I can't get the shitty free music I didn't pay for unless I jailbreak it but then it would become like droid and get music herpies. Seriously, its the biggest complaint I here about Apple. Bill Gates wrote Office for Apple and gave them money that means its all Microsoft.. Waa!! Apple is consistent in their programming so people don't have to completely relearn in every 5 years-- thats bullshit!! They can't do that!!

None of that has to do with technical analysis or even a big world view.
None of it has to do with Apple making you money.
I will ride your stupid ETF's on actual Apple stock while maintain better diversity.

I'm confused.  Can someone translate this?  I can't tell what parts are serious, sarcasm, impersonations of "weenies," or impersonations of people the author thinks are smart. 

I don't think anyone here was actually trashing Apple in their current state.  I(and others) pointed out predicting their current state 20 years ago and realizing the 25,000% return you were going on about was unrealistic since they looked pretty pitiful at every point in their history until the ipod and they didn't actually look "good" until after the iPhone overtook Blackberry in smartphone sales.

Since I can't tell if "None of that has to do with technical analysis or even a big world view" was serious or sarcasm I'm not sure if I should laugh, cry, or feel confused.  In your first post you say we should look at the fundamentals.  So which is it?  Are we using fundamental analysis to pick the future or technical analysis to pick the future? 

As a side note most ETFs don't hold 15% Apple.  Most people here don't use QQQ.  They use VTI(or VTSAX.. same thing really).  It is only 3% apple, owns over 3500 companies, and when combined with its close cousin VXUS in a 70/30 ratio you are only about 2% apple and you own almost 10,000 different stocks.
Title: Re: Can't beat an Index
Post by: Bob W on April 18, 2015, 02:28:27 PM
Samsung is to Apple as Apple was to BlackBerry.
Title: Re: Can't beat an Index
Post by: mrpercentage on April 18, 2015, 04:26:38 PM
The definition of a weenie is someone who tries argue semantics and make up the definition of every word to match his own confirmation bias. Lot of Apple haters out there. Got a whole lot of Apple is a bunch of thieves.. and I hate apple because I can't get the shitty free music I didn't pay for unless I jailbreak it but then it would become like droid and get music herpies. Seriously, its the biggest complaint I here about Apple. Bill Gates wrote Office for Apple and gave them money that means its all Microsoft.. Waa!! Apple is consistent in their programming so people don't have to completely relearn in every 5 years-- thats bullshit!! They can't do that!!

None of that has to do with technical analysis or even a big world view.
None of it has to do with Apple making you money.
I will ride your stupid ETF's on actual Apple stock while maintain better diversity.

I'm confused.  Can someone translate this?  I can't tell what parts are serious, sarcasm, impersonations of "weenies," or impersonations of people the author thinks are smart. 

I don't think anyone here was actually trashing Apple in their current state.  I(and others) pointed out predicting their current state 20 years ago and realizing the 25,000% return you were going on about was unrealistic since they looked pretty pitiful at every point in their history until the ipod and they didn't actually look "good" until after the iPhone overtook Blackberry in smartphone sales.

Since I can't tell if "None of that has to do with technical analysis or even a big world view" was serious or sarcasm I'm not sure if I should laugh, cry, or feel confused.  In your first post you say we should look at the fundamentals.  So which is it?  Are we using fundamental analysis to pick the future or technical analysis to pick the future? 

As a side note most ETFs don't hold 15% Apple.  Most people here don't use QQQ.  They use VTI(or VTSAX.. same thing really).  It is only 3% apple, owns over 3500 companies, and when combined with its close cousin VXUS in a 70/30 ratio you are only about 2% apple and you own almost 10,000 different stocks.

If you are telling me Apple is a bad idea-- give me a reason. Any real reason.
I didn't hear-- you know mr percentage Apple has negative insider trading, or you know mr percentage it might be at the end of an incredible run, or you know factor X makes that theory crap.
Instead I get 25,000%.. Are you having a stroke.. or jerking off or whatever they meant.
I could be totally misreading reading you guys or I could be ambiguous.. the key to every prophet. I should address people by name in here to remove confusion and I suppose others should do the same. Maybe we need a light that goes on to display humor (perhaps a smiley face) so we know when we are being smart asses like the robot on interstellar.
____ just wanted to add, the last part you mentioned is much better.
------adding again, sorry I should think longer before I post, I use fundamentals to decide to sell-- not to buy, as you said they will not tell you if a company is going up 25,000% The bigger world view of hey everyone is buying this new smart phone does though...or hey all these ETF's that a lot of people buy are really heavy on Apple.. sure I used one of the most extreme versions with QQQ.. 25,000% also shows the value of holding a good company through thick and thin

On that note Disney has positive insider trading and a lot of reasons it will be very successful for the next few years. Hence I don't need to care what the price is cause I know it will be higher in five years. I know that I know that I know, unless some unforeseen major disaster that screws us all comes.
Also, I buy and own everything Apple. I have to check my own bias because I love that company and that is how I invest-- smart or not-- is when I see true value and quality. I have to answer the question would I want that as a family business? I still think Apple will go higher because they are a great company and because many people use ETF's heavy on Apple.
Title: Re: Can't beat an Index
Post by: dungoofed on April 18, 2015, 06:09:02 PM
There was even a phone that played Mp3s before the iPod, but it wasn't famous and I didn't feel like getting to far into the weeds.

Naw, I'm too much of an jerk to let you weasel out of that one. If you had simply said "they invented a mini computer that played music", I wouldn't have batted an eyelash. But you doubled-down, explicitly stating (with amazement) that they were the first to consider connecting a hard drive and speakers. It's ok, I'm an old man. It sounds like you weren't around to see my friend's ugly-ass Archos monstrosity, so no one expects you to know ancient history. But that's no excuse to go around making it up!

Besides the iPhone (whose keyboardless interface *was* unique at the time), most other things Apple wants you to believe it invented (iPod, iPad, big iPhone, Apple Watch) have really just been things that it has marketed executed more successfully than earlier companies did.

FTFY. Otherwise I don't disagree. Thankfully for shareholders (including indexers) executing better than anyone else happens to be a profitable and not easily replicable business model.

Edit accepted. Inasmuch as "marketing" is a subset of "execution". And yeah, even if marketing was the only part of their execution that mattered (I agree that it's not), as a shareholder I'd still be totally onboard with that.

Yup, I had one of those!  Was hoping someone would speak up and remind everyone that Apple didn't invent the mp3 player.  Actually, I remember telling my friends that the iPod was more expensive, and had less storage than my amazing Archos:

(http://ecx.images-amazon.com/images/I/41JPEBVFCPL.jpg)

Owner of Diamond Rio 500 and Diamond Rio DR30 (Japan-only) here. My dumbass friends were all buying moving-parts devices like minidisc players and the ipod, but anyone who had listened to music while jogging/running in their life knew that mp3 was the way forward.
Title: Re: Can't beat an Index
Post by: iamlindoro on April 18, 2015, 06:55:58 PM
If you are telling me Apple is a bad idea-- give me a reason. Any real reason.
I didn't hear-- you know mr percentage Apple has negative insider trading, or you know mr percentage it might be at the end of an incredible run, or you know factor X makes that theory crap.
Instead I get 25,000%.. Are you having a stroke.. or jerking off or whatever they meant.
I could be totally misreading reading you guys or I could be ambiguous.. the key to every prophet. I should address people by name in here to remove confusion and I suppose others should do the same. Maybe we need a light that goes on to display humor (perhaps a smiley face) so we know when we are being smart asses like the robot on interstellar.
____ just wanted to add, the last part you mentioned is much better.
------adding again, sorry I should think longer before I post, I use fundamentals to decide to sell-- not to buy, as you said they will not tell you if a company is going up 25,000% The bigger world view of hey everyone is buying this new smart phone does though...or hey all these ETF's that a lot of people buy are really heavy on Apple.. sure I used one of the most extreme versions with QQQ.. 25,000% also shows the value of holding a good company through thick and thin

On that note Disney has positive insider trading and a lot of reasons it will be very successful for the next few years. Hence I don't need to care what the price is cause I know it will be higher in five years. I know that I know that I know, unless some unforeseen major disaster that screws us all comes.
Also, I buy and own everything Apple. I have to check my own bias because I love that company and that is how I invest-- smart or not-- is when I see true value and quality. I have to answer the question would I want that as a family business? I still think Apple will go higher because they are a great company and because many people use ETF's heavy on Apple.

OK, I'll bite.  Look, I will be frank with you.  What others here are trying to do is find a semi-humorous way of telling you that your style of communicating makes you seem extremely ill informed and uneducated.  That may not be the case-- indeed, you may be smarter than all of us-- but from the poorly punctuated, grammatically incorrect, overly dramatic, and extremely aggressive material you give us to work with, it's hard to take you seriously.  You come across as someone with very little experience in investing who is letting his dreams of dollar signs get in the way of good sense.

Nobody here will deny that it is possible to beat the market over short timelines.  What is extremely hard is consistently beating the market over the timelines necessary to sustain an early and extended retirement.  Literally, the brightest financial minds in the industry have a 99%+ failure rate at beating the market at timelines over 10 years.  An index approach is *not* a conservative approach, just so you know.  Any all or mostly stocks approach is highly volatile.  An index approach is just as close to a sure thing as it gets when it comes to stocks:  You can't lose it all (barring total societal collapse) and there are over 100 years of evidence reinforcing a 7-8% annual return, which is more than enough to get the job done, quick.  Apple has a market beating performance of under 15 years, and while I love them as a company too, I'm not willing to stake my retirement claim on them.  The more successful Apple is, the more of the market they will represent and the more of them I will own by default.  But if, god forbid, Apple should have a major scandal that causes major damage to the company, even an apocalyptic "whole company is gone" scenario can't slow my FI/RE plans by much.  Just as Apple was able to take the entire market by surprise with the iPod and iPhone, the potential exists for another company to come out of nowhere and eat Apple's lunch.  It is that unknown factor that makes Index investing the best course of action if your primary goal is early retirement. If your goal is to roll the dice on the stock market and get rich as hell, I wish you the best of luck, but this probably isn't the place for you.

If you want to not be teased (and to be frank, the teasing you've gotten has been pretty gentle in nature), you need to present your ideas in a cogent, compelling, and data oriented way.  That is not way you've done so far.  Again, it is incredibly easy to cherry pick recent data and then suggest that recent stellar performance will continue.  To an extent, it may do so-- but if crushing the market were as simple as picking the most visible example of a hot stock, and then hopping onto the next one, until your money has to be kept in a swimmable vault, then everyone would be doing it.  Hell, then *anyone* would have done it.  Seeing people make it big on a single stock is not unheard of-- but it is so vanishingly rare that it is not a valid investment strategy.  For every one person to make massive returns on a small handful of stocks, literally tens of thousands lose their shirt.

Probably everyone responding to you here has made this mistake at least once, hopefully with a small amount of money, and probably some with a large amount of money.  The advice you're getting isn't because we're all pussies-- it's because we all have learned better in the most painful way possible.
Title: Re: Can't beat an Index
Post by: mrpercentage on April 18, 2015, 08:14:16 PM
OK, I'll bite.  Look, I will be frank with you.  What others here are trying to do is find a semi-humorous way of telling you that your style of communicating makes you seem extremely ill informed and uneducated. 
Probably everyone responding to you here has made this mistake at least once, hopefully with a small amount of money, and probably some with a large amount of money.  The advice you're getting isn't because we're all pussies-- it's because we all have learned better in the most painful way possible.

Thank you for your candor. While I quoted only a small portion, I did read the entire post and will chew on it for a while.
Title: Re: Can't beat an Index
Post by: Indexer on April 18, 2015, 09:17:31 PM
If you are telling me Apple is a bad idea-- give me a reason. Any real reason.
I didn't hear-- you know mr percentage Apple has negative insider trading, or you know mr percentage it might be at the end of an incredible run, or you know factor X makes that theory crap.
Instead I get 25,000%.. Are you having a stroke.. or jerking off or whatever they meant.
I could be totally misreading reading you guys or I could be ambiguous.. the key to every prophet. I should address people by name in here to remove confusion and I suppose others should do the same. Maybe we need a light that goes on to display humor (perhaps a smiley face) so we know when we are being smart asses like the robot on interstellar.
____ just wanted to add, the last part you mentioned is much better.
------adding again, sorry I should think longer before I post, I use fundamentals to decide to sell-- not to buy, as you said they will not tell you if a company is going up 25,000% The bigger world view of hey everyone is buying this new smart phone does though...or hey all these ETF's that a lot of people buy are really heavy on Apple.. sure I used one of the most extreme versions with QQQ.. 25,000% also shows the value of holding a good company through thick and thin

On that note Disney has positive insider trading and a lot of reasons it will be very successful for the next few years. Hence I don't need to care what the price is cause I know it will be higher in five years. I know that I know that I know, unless some unforeseen major disaster that screws us all comes.
Also, I buy and own everything Apple. I have to check my own bias because I love that company and that is how I invest-- smart or not-- is when I see true value and quality. I have to answer the question would I want that as a family business? I still think Apple will go higher because they are a great company and because many people use ETF's heavy on Apple.

In summary...

Me:  "I don't think anyone here was actually trashing Apple in their current state."
your response: "If you are telling me Apple is a bad idea-- give me a reason. Any real reason."

The conversation you think we having is not the real conversation at hand.  I'm not trashing Apple.  I'm saying you shouldn't invest in something because in the past it was up 25,000%.  You should only invest in something if you can justify why it would go up in the future, AND your justification makes sense.  More importantly you need to recognize that when you own just a couple individual stocks you are taking 100% risk. Your value can hit zero.  If you own 'everything' through index funds you get the growth of the world economy.  There are ups and downs, but it trends up.  Why does that seem so strange?
Title: Re: Can't beat an Index
Post by: Dodge on April 18, 2015, 09:26:56 PM
There was even a phone that played Mp3s before the iPod, but it wasn't famous and I didn't feel like getting to far into the weeds.

Naw, I'm too much of an jerk to let you weasel out of that one. If you had simply said "they invented a mini computer that played music", I wouldn't have batted an eyelash. But you doubled-down, explicitly stating (with amazement) that they were the first to consider connecting a hard drive and speakers. It's ok, I'm an old man. It sounds like you weren't around to see my friend's ugly-ass Archos monstrosity, so no one expects you to know ancient history. But that's no excuse to go around making it up!

Besides the iPhone (whose keyboardless interface *was* unique at the time), most other things Apple wants you to believe it invented (iPod, iPad, big iPhone, Apple Watch) have really just been things that it has marketed executed more successfully than earlier companies did.

FTFY. Otherwise I don't disagree. Thankfully for shareholders (including indexers) executing better than anyone else happens to be a profitable and not easily replicable business model.

Edit accepted. Inasmuch as "marketing" is a subset of "execution". And yeah, even if marketing was the only part of their execution that mattered (I agree that it's not), as a shareholder I'd still be totally onboard with that.

Yup, I had one of those!  Was hoping someone would speak up and remind everyone that Apple didn't invent the mp3 player.  Actually, I remember telling my friends that the iPod was more expensive, and had less storage than my amazing Archos:

(http://ecx.images-amazon.com/images/I/41JPEBVFCPL.jpg)

Owner of Diamond Rio 500 and Diamond Rio DR30 (Japan-only) here. My dumbass friends were all buying moving-parts devices like minidisc players and the ipod, but anyone who had listened to music while jogging/running in their life knew that mp3 was the way forward.

I had a Rio too!  It only had 32mb of storage, which forced me to recompress everything as 64kbps WMA, but hey, it was the year 2000 :-P

I can't tell you how amazed I was a few years later when I upgraded to 20GBs of:

(http://ecx.images-amazon.com/images/I/41RH0EWPD3L._SX425_.jpg)
(http://images.amazon.com/images/P/B000294HDU.01-AFK4B2ETLE86K._SCLZZZZZZZ_.jpg)
(http://img.tomshardware.com/us/2004/12/16/microsoft_gets_inside_samsung/samsunf_pmc_4.jpg)

I remember sitting at dinner with a bunch of friends, and saying, "Look at this device.  It has more storage than the iPod, it's cheaper than the iPod, it has a built-in kick-stand, and a HUGE screen for watching TV!  It even automatically connects to my computer, and updates every night with the latest TV shows I've recorded from the previous day.  And you know what?  In a few years, Apple will make a device that looks just like this, with a video screen and everything, again it be more expensive, and with less features than this...but it'll be white, it will have an Apple logo....and guys, I promise you...people will think Apple invested it!"

I was right

(http://theinspirationroom.com/daily/commercials/2005/10/iPod-U2-video.jpg)

The best part?  I'm friends with someone who sold at today's equivalent of $28, "It will never go higher than this.  I promise you!"  He got in at something like $5, so he was quite happy with himself.  Well had he kept the stock until now, he would've grown his money an additional 5x from when he sold at $28.  You can't predict the future mrpercentage...even when you're right.  Quit while you're ahead, go 100% index funds, and spend all your new-found free time doing something fun :)
Title: Re: Can't beat an Index
Post by: Ricky on April 18, 2015, 09:50:44 PM
You can't predict the future mrpercentage...even when you're right.  Quit while you're ahead, go 100% index funds, and spend all your new-found free time doing something fun :)

Investing is fun for some people. I wouldn't be one to advocate against speculative plays, so long as it didn't make a significant part of one's portfolio. Apple is not necessarily a spec play in terms of risk nor growth. It isn't exactly super risky as long as you're not all in, but it's never going to see the kind of growth it has, at least not likely.

For the record, no one can predict the future of index funds either. If one's rationale for not investing in Apple is solely based on the fact that it has already seen 25,000% growth, then logically one should not use history as an indicator for future success across any securities. The only thing that makes the index marginally safer is the high amount of exposure and diversification one usually gets, of course.

There is most certainly room in most people's portfolios for spec plays. If you truly understand business and value and the company you're investing in, and you don't feel like you're gambling, then by all means you should make those bets if it suits your timeline and risk tolerance.
Title: Re: Can't beat an Index
Post by: Dodge on April 18, 2015, 10:49:57 PM
You can't predict the future mrpercentage...even when you're right.  Quit while you're ahead, go 100% index funds, and spend all your new-found free time doing something fun :)

Investing is fun for some people. I wouldn't be one to advocate against speculative plays, so long as it didn't make a significant part of one's portfolio. Apple is not necessarily a spec play in terms of risk nor growth. It isn't exactly super risky as long as you're not all in, but it's never going to see the kind of growth it has, at least not likely.

For the record, no one can predict the future of index funds either. If one's rationale for not investing in Apple is solely based on the fact that it has already seen 25,000% growth, then logically one should not use history as an indicator for future success across any securities. The only thing that makes the index marginally safer is the high amount of exposure and diversification one usually gets, of course.

There is most certainly room in most people's portfolios for spec plays. If you truly understand business and value and the company you're investing in, and you don't feel like you're gambling, then by all means you should make those bets if it suits your timeline and risk tolerance.

I was hoping someone would mention that individual stock picking can be fun.  Once I show an individual stock picker that they are almost statistically guaranteed to lose money vs the index over the long term...it suddenly becomes less fun for them!

Do you think mrpercentage would still have fun picking individual stocks if he/she consistently earned less money each and every year, over the next 30-50 years, despite all the extra work?
Title: Re: Can't beat an Index
Post by: beltim on April 18, 2015, 10:56:40 PM
You can't predict the future mrpercentage...even when you're right.  Quit while you're ahead, go 100% index funds, and spend all your new-found free time doing something fun :)

Investing is fun for some people. I wouldn't be one to advocate against speculative plays, so long as it didn't make a significant part of one's portfolio. Apple is not necessarily a spec play in terms of risk nor growth. It isn't exactly super risky as long as you're not all in, but it's never going to see the kind of growth it has, at least not likely.

For the record, no one can predict the future of index funds either. If one's rationale for not investing in Apple is solely based on the fact that it has already seen 25,000% growth, then logically one should not use history as an indicator for future success across any securities. The only thing that makes the index marginally safer is the high amount of exposure and diversification one usually gets, of course.

There is most certainly room in most people's portfolios for spec plays. If you truly understand business and value and the company you're investing in, and you don't feel like you're gambling, then by all means you should make those bets if it suits your timeline and risk tolerance.

I was hoping someone would mention that individual stock picking can be fun.  Once I show an individual stock picker that they are almost statistically guaranteed to lose money vs the index over the long term...it suddenly becomes less fun for them!

Do you think mrpercentage would still have fun picking individual stocks if he/she consistently earned less money each and every year, over the next 30-50 years, despite all the extra work?

Someone losing to the market every year for 50 consecutive years is probably rarer than someone beating the market every year for 50 straight years.  About the only way to do it is rack up more in fees than the market has ever returned.
Title: Re: Can't beat an Index
Post by: Dodge on April 18, 2015, 11:06:07 PM
For the record, no one can predict the future of index funds either. If one's rationale for not investing in Apple is solely based on the fact that it has already seen 25,000% growth, then logically one should not use history as an indicator for future success across any securities. The only thing that makes the index marginally safer is the high amount of exposure and diversification one usually gets, of course.

Using past performance as an indicator to buy a specific company, is idiotic, and isn't even in the same league as using past performance as an indicator to buy the entire market.  And not because of risk either.  When someone buys the whole market, they are doing so with the expectation that the entire world economy as a whole will continue to grow, because of things like population and productivity (technology makes us more productive) increases.  This is the equivalent of looking in a petri dish and watching bacteria grow.  We can measure the growth rate, and be reasonably sure it will continue to grow at around the same pace.

Most people are missing a very important aspect of the market...They don't see that it's a competition.  Tell someone they can beat Michael Jordan in a game of basketball, and they will laugh in your face...but give them a sales pitch for "one weird trick" to beat the market, and they will line up to give you money.

When someone buys individual stocks, or an active fund, there is a competition factor which is missing from the above petri dish example.  You're competing against all other market participants, and unlike the bacteria, they adapt and make changes based on available information.  When someone claims they can beat that market over the long term, they're saying they can beat over half of all money invested in the market this year, then again next year, and again the year after that...for as long as they live.  All by using published, widely known information, that the other market participants (the people they claim to be beating) are aware of.  This is essentially the claim:

"<Insert Strategy Here> beat over half of all invested dollars in the past.  While this information is public, I do not expect the losers to adopt my published strategy, or change to a better strategy, so I expect it to continue beating over half of all invested dollars in the future."

This isn't just someone saying, "I can beat Lebron James in a 1 on 1 basketball game, you can too!"

It's, "I can beat Lebron James in a 1 on 1 basketball game, every single year, and he knows exactly what I'm going to do each time, and he doesn't copy my strategy or figure out a way to beat me, so I expect I will continue beating him in the future, you can too!"

Compared to:

"Indexing beat or matched half of all invested dollars in the past, I do not expect mathematical laws to change, so I expect it to beat or match half of all invested dollars in the future."

Which one of these statements are you willing to bet your life savings on?
Title: Re: Can't beat an Index
Post by: aspiringnomad on April 18, 2015, 11:07:26 PM
My brother sent me a Rio 32 MB that he had been given to test as part of his software dev job. Was excited to get it until I realized it only held 8 songs. Sold it on ebay in early 2001. Will never forget about that because I shipped it to the buyer's office at the World Trade Center.

While we're going down memory lane, I had a friend who was an early adopter Apple freak who had the first iPod before it really got popular. When I saw it held 1k songs and then used that click wheel I thought I need to buy some Apple stock right now. Wish it had been more than just a thought.
Title: Re: Can't beat an Index
Post by: Dodge on April 18, 2015, 11:13:03 PM
Someone losing to the market every year for 50 consecutive years is probably rarer than someone beating the market every year for 50 straight years.  About the only way to do it is rack up more in fees than the market has ever returned.

I disagree, but it doesn't matter, because the probabilities aren't relevant to my point.
Title: Re: Can't beat an Index
Post by: beltim on April 18, 2015, 11:19:04 PM
Someone losing to the market every year for 50 consecutive years is probably rarer than someone beating the market every year for 50 straight years.  About the only way to do it is rack up more in fees than the market has ever returned.

I disagree, but it doesn't matter, because the probabilities aren't relevant to my point.

It doesn't matter, except that by overstating your case people are less likely to heed your advice.  Whether it's up or down for 50 consecutive years isn't important, but saying he's going to lose to the market for 30-50 straight years is so unbelievably improbable that it's easy to dismiss the rest of what you're saying.  And that would be a shame.
Title: Re: Can't beat an Index
Post by: Dodge on April 18, 2015, 11:32:58 PM
Someone losing to the market every year for 50 consecutive years is probably rarer than someone beating the market every year for 50 straight years.  About the only way to do it is rack up more in fees than the market has ever returned.

I disagree, but it doesn't matter, because the probabilities aren't relevant to my point.

It doesn't matter, except that by overstating your case people are less likely to heed your advice.  Whether it's up or down for 50 consecutive years isn't important, but saying he's going to lose to the market for 30-50 straight years is so unbelievably improbable that it's easy to dismiss the rest of what you're saying.  And that would be a shame.

While based on his/her posts thus far, I don't believe it to be so improbable, I made no such assertion.  I wasn't going down that path.  The point of the question was to separate "fun" from "monetary gain" and show that they are linked.  Simply put, it's not fun to lose money.  I assert that if people truly believe their stock picking efforts will end up losing them money (vs the index), they wouldn't do it.
Title: Re: Can't beat an Index
Post by: beltim on April 18, 2015, 11:49:41 PM
Someone losing to the market every year for 50 consecutive years is probably rarer than someone beating the market every year for 50 straight years.  About the only way to do it is rack up more in fees than the market has ever returned.

I disagree, but it doesn't matter, because the probabilities aren't relevant to my point.

It doesn't matter, except that by overstating your case people are less likely to heed your advice.  Whether it's up or down for 50 consecutive years isn't important, but saying he's going to lose to the market for 30-50 straight years is so unbelievably improbable that it's easy to dismiss the rest of what you're saying.  And that would be a shame.

While based on his/her posts thus far, I don't believe it to be so improbable, I made no such assertion.  I wasn't going down that path.  The point of the question was to separate "fun" from "monetary gain" and show that they are linked.  Simply put, it's not fun to lose money.  I assert that if people truly believe their stock picking efforts will end up losing them money (vs the index), they wouldn't do it.

Technically you didn't assert it.  You just asked if they lost money each of the next 30-50 years, would they still find it fun.  I agree with your general point, but if you start a question with a premise that is statistically impossible, then the rest of your question is irrelevant.

It's like starting a question with, if you got struck by lightning 10 times, would you still enjoy hiking outdoors?  Well, probably not, but who cares?
Title: Re: Can't beat an Index
Post by: NICE! on April 19, 2015, 04:08:33 AM
This is rosy retrospection bias at its finest. You're completely ignoring other titans that have come and gone, companies that went from burning-hot growth to slow-moving blue-chip status, and the fact that you could be buying at exactly the wrong (or right) time.

You're also assuming that your knowledge is already priced into things. For example, you mention Star Wars. People have known for awhile that Disney bought the IPs and is producing movies. Do you think that the market hasn't priced in this information?

There are several people here who are not indexers. The best people in this camp are extremely well-read and deliberate investors that would find your approach seriously lacking. Please, pick up some books for your own sake. You don't even have to read exclusively from the indexing cannon - read Lynch's Beating the Street, anything by Buffet, Stocks for the Long Run, and A Random Walk Down Wall Street. Check out Swedroe, check out Browne. Hit a wide range of thinking.

I would advise against boasting about your expertise if you haven't even read the works of some of the best thinkers out there.
Title: Re: Can't beat an Index
Post by: Ricky on April 19, 2015, 06:34:43 AM
For the record, no one can predict the future of index funds either. If one's rationale for not investing in Apple is solely based on the fact that it has already seen 25,000% growth, then logically one should not use history as an indicator for future success across any securities. The only thing that makes the index marginally safer is the high amount of exposure and diversification one usually gets, of course.

Using past performance as an indicator to buy a specific company, is idiotic, and isn't even in the same league as using past performance as an indicator to buy the entire market.  And not because of risk either.  When someone buys the whole market, they are doing so with the expectation that the entire world economy as a whole will continue to grow, because of things like population and productivity (technology makes us more productive) increases.  This is the equivalent of looking in a petri dish and watching bacteria grow.  We can measure the growth rate, and be reasonably sure it will continue to grow at around the same pace.



I'm sorry, but you're so set on not buying an individual stock that you're missing the point. Analysis is analysis. Risk is risk. Using a historical analysis on an individual company is the same as doing it on the market as a whole. The only difference is risk. Whether it isn't in "the same league" or is idiotic is totally irrelevant to my point (again, confusing analysis with risk). No where did I say that you should buy individual stocks over the market as a whole. I'm simply advocating that research and business sense should be required before I let you buy any type of security.

Also, most of the external factors you listed would play into a decision of buying an individual stock: world economy, technology, legalities, etc...It's just on a smaller scale.

Quote from: Dodge
Which one of these statements are you willing to bet your life savings on?

Neither, because they're horrible analogies.

Quote from: Dodge
I was hoping someone would mention that individual stock picking can be fun. 

I believe you misconstrued my words. I said investing can be fun. Investing in general can mean tons of things. Just because my vocabulary isn't limited to "index" and "funds" doesn't mean I am daydreaming about individual stocks all day.

Quote from: Dodge
Once I show an individual stock picker that they are almost statistically guaranteed to lose money vs the index over the long term

Please show these stats to Buffett.

Also please do more research on "statistics" in general before you continue to hold statistics as the be all, end all, mighty power of prediction. There are many scientists who would tell you statistics are a pointless field.

Am I saying anyone here can beat Buffett, or match him? Not at all, but some of us like to dream and do our research, hence the fun.

And by the way, none of what I'm saying is directly related to OP. I frankly couldn't even read his first post so I have no comment on whether he is doing the right thing for him.
Title: Re: Can't beat an Index
Post by: mrpercentage on April 19, 2015, 08:41:08 AM
I would advise against boasting about your expertise if you haven't even read the works of some of the best thinkers out there.
Fair enough.. Im no expert. I will read more as time allows. I just might be a lucky bastard, but I am in fact beating the shit out of the market right now. For how long? Who knows... I often like to share good fortune but perhaps it not in my power to. I just might be lucky. I hope its not luck
(http://i820.photobucket.com/albums/zz124/azwolf25/Screen%20Shot%202015-04-19%20at%207.36.12%20AM.jpg) (http://s820.photobucket.com/user/azwolf25/media/Screen%20Shot%202015-04-19%20at%207.36.12%20AM.jpg.html)
Title: Re: Can't beat an Index
Post by: Dodge on April 19, 2015, 09:08:06 AM
For the record, no one can predict the future of index funds either. If one's rationale for not investing in Apple is solely based on the fact that it has already seen 25,000% growth, then logically one should not use history as an indicator for future success across any securities. The only thing that makes the index marginally safer is the high amount of exposure and diversification one usually gets, of course.

Using past performance as an indicator to buy a specific company, is idiotic, and isn't even in the same league as using past performance as an indicator to buy the entire market.  And not because of risk either.  When someone buys the whole market, they are doing so with the expectation that the entire world economy as a whole will continue to grow, because of things like population and productivity (technology makes us more productive) increases.  This is the equivalent of looking in a petri dish and watching bacteria grow.  We can measure the growth rate, and be reasonably sure it will continue to grow at around the same pace.



I'm sorry, but you're so set on not buying an individual stock that you're missing the point. Analysis is analysis. Risk is risk. Using a historical analysis on an individual company is the same as doing it on the market as a whole. The only difference is risk. Whether it isn't in "the same league" or is idiotic is totally irrelevant to my point (again, confusing analysis with risk). No where did I say that you should buy individual stocks over the market as a whole. I'm simply advocating that research and business sense should be required before I let you buy any type of security.

Also, most of the external factors you listed would play into a decision of buying an individual stock: world economy, technology, legalities, etc...It's just on a smaller scale.

Quote from: Dodge
Which one of these statements are you willing to bet your life savings on?

Neither, because they're horrible analogies.

Quote from: Dodge
I was hoping someone would mention that individual stock picking can be fun. 

I believe you misconstrued my words. I said investing can be fun. Investing in general can mean tons of things. Just because my vocabulary isn't limited to "index" and "funds" doesn't mean I am daydreaming about individual stocks all day.

Quote from: Dodge
Once I show an individual stock picker that they are almost statistically guaranteed to lose money vs the index over the long term

Please show these stats to Buffett.

Also please do more research on "statistics" in general before you continue to hold statistics as the be all, end all, mighty power of prediction. There are many scientists who would tell you statistics are a pointless field.

Am I saying anyone here can beat Buffett, or match him? Not at all, but some of us like to dream and do our research, hence the fun.

And by the way, none of what I'm saying is directly related to OP. I frankly couldn't even read his first post so I have no comment on whether he is doing the right thing for him.

I love it when people use Buffet as evidence that "I too can beat the market!", when apparently it's so rare to beat the market over the long term, that when someone does it everyone knows their name!  If people want to throw money away at their fun dream of being the next Buffet, good luck!  But for the sake of the newbies in the forum (and there are a lot of them), I will continue to remind everyone how bad of an idea this is...especially in the context of early retirement.

(http://im.ft-static.com/content/images/d6d02358-aadf-4d56-bc27-3e62e5f5691c.img)
Title: Re: Can't beat an Index
Post by: lemanfan on April 19, 2015, 09:45:02 AM

The best part?  I'm friends with someone who sold at today's equivalent of $28, "It will never go higher than this.  I promise you!"  He got in at something like $5, so he was quite happy with himself.  Well had he kept the stock until now, he would've grown his money an additional 5x from when he sold at $28.  You can't predict the future mrpercentage...even when you're right. 

Don't forget the 7-1 stock split they did a while back.  The current stock price is $875 in pre-split stocks, i.e. if he'd kept the stock it would have been more than 30x the money from selling at $28.

It's very very easy to sell too early when you make a big gain quickly.  I sold a local bank stockh way to early in the same way after the financial crisis... hindsight is 20/20.  :)
Title: Re: Can't beat an Index
Post by: NICE! on April 19, 2015, 10:54:33 AM
Fair enough.. Im no expert. I will read more as time allows. I just might be a lucky bastard, but I am in fact beating the shit out of the market right now. For how long? Who knows... I often like to share good fortune but perhaps it not in my power to. I just might be lucky. I hope its not luck

It is almost certainly luck and the fact that you don't realize it really makes me fear for your investing future. Are you male? I am too, and the literature says that we are the worst at this - we attribute to skill what is almost assuredly luck and then we forget the times we fail. This is really dangerous in investing.

Again, not everyone kneels at the altar of indexing. I'll readily admit that I do. However, both I and many of those in this forum who aren't index investors go at this with clear eyes and education. Read the books and do the research. Until then, active investment is definitely foolhardy - you're just rolling the dice. Even after you've read the cannon and the books I'd say it isn't the best route, but I respect that some people will come to a different conclusion.
Title: Re: Can't beat an Index
Post by: Indexer on April 19, 2015, 12:19:19 PM
I would advise against boasting about your expertise if you haven't even read the works of some of the best thinkers out there.
Fair enough.. Im no expert. I will read more as time allows. I just might be a lucky bastard, but I am in fact beating the shit out of the market right now. For how long? Who knows... I often like to share good fortune but perhaps it not in my power to. I just might be lucky. I hope its not luck
[/URL]

Can you explain your investing strategy to the rest of us?   If you don't really have a concrete 'strategy' then it is luck.  And luck isn't something you should rely on going forward.  Luck just means the statistical odds played out in your favor.  Someone wins the lottery... that doesn't mean you should assume it will be you.

I'll share first.  My strategy(which I've posted on this forum before so it can be checked.):  90% of my portfolio is total market index funds matching my overall asset allocation goal.  Right now my asset allocation is still 100% stocks so I use the Vanguard Total Stock index and the Vanguard Total International stock index in a 65/35 split.  The reason I use 65/35 split is because that is where the ratio of domestic VS international stocks achieves the greatest dip in overall risk thanks to the assets not being perfectly correlated.  If you plot this portfolio on the efficient frontier you will find it sits right on the efficient frontier(the perfect balance of risk VS returns).  Having 90% of my portfolio in total market index funds guarantees at worst I will get roughly 90% of the market return after the nearly nonexistent fees. 

The other 10% of my portfolio can be shifted based on my interpretations of how the market is currently priced and how that will likely affect future returns.  I look at the price discrepancies between market sub-asset classes to find areas of the market that are priced high or low compared to other parts of the market.  If I find large pricing discrepancies then I look deeper into the data to try and find a logical reason 'why' there should be a large valuation premium or discount between the asset classes.  Normally there is a valid economic reason for the difference so I do nothing.  Sometimes I find discrepancies that don't have an economic explanation and the most likely reason for the valuation discrepancy is that investor fear or greed is pushing one sub-asset class higher or lower than the other.  The extra 10% goes into the lower valued asset with the expectation that over time the discrepancy will shrink back to its historical norm and I will either see growth in the lower valued group of assets or I will avoid losses in the higher valued group of assets.  If the entire market looks too highly valued(again using many different measurements) the 10% will go into either bonds, high yield savings, or peer to peer lending. 

I also have a rule I can't make a shift more than once a year.  This forces me to really be sure before I pull the trigger.  Even when I do invest in these assets I'm still using index funds.  ;)  Since implementing this strategy I've outperformed the markets by a small margin, but I primarily do it because I like doing it as a hobby.  The reason I stick to only messing with 10% of the portfolio is that keeps it interesting, but at the same time a bad decision isn't going to cause major financial damage.  In late 2013/early 2014 there was a pretty big discrepancy in the valuations of domestic small caps VS domestic large caps using several different valuation metrics(P/E, CAPE, P/B, etc.).  The only explanation appeared to be investors had been very bullish on small-caps so I shifted more into large caps by putting 10% of my portfolio in the Vanguard 500 index.  That discrepancy corrected for the most part in late 2014, and in 2014 the 500 index grew 13.64% compared with 7.56% for the extended market(small/mid caps).  Since then the extra 10% has been in international stocks which look priced very well compared to domestic stocks.  I believe this is because of overall fear about the international markets.  While there are some concerns(Greece) they represent a tiny fraction of the overall markets but a huge portion of media coverage.  ;)

If you don't have a strategy... make one... or you are probably better off sticking with a target date fund.
Title: Re: Can't beat an Index
Post by: mrpercentage on April 19, 2015, 07:30:41 PM
I would advise against boasting about your expertise if you haven't even read the works of some of the best thinkers out there.
Fair enough.. Im no expert. I will read more as time allows. I just might be a lucky bastard, but I am in fact beating the shit out of the market right now. For how long? Who knows... I often like to share good fortune but perhaps it not in my power to. I just might be lucky. I hope its not luck
[/URL]

Can you explain your investing strategy to the rest of us?   If you don't really have a concrete 'strategy' then it is luck.  And luck isn't something you should rely on going forward.  Luck just means the statistical odds played out in your favor.  Someone wins the lottery... that doesn't mean you should assume it will be you.

If you don't have a strategy... make one... or you are probably better off sticking with a target date fund.

Okay, first the bulk of my investments are mutual funds or index. I find index very alluring. I just happen to have a NAV benefit in one of the best mutual fund companies out there and I think I would have to be a fool not to use that NAV.

I like AMECX (currently, subject to change). It is a dividend income fund and when the market dips it dips less and it pays me 4.5% in dividends every year.

I also use Betterment for my safety net.. currently 100% stocks until April 28 or 29.. I will do a seasonal readjustment with them. TLT got a slight rise while stocks just took a hit.. the transfer is starting if this trend continues I will adjust sooner.

Now on stocks. It is a little hard to explain because I am using art not science. I am fishing or painting a stock picture not building a money making robot.

1. I keep my mind open and stay in financial news. This allows me to recognize opportunity
2. I stay with quality. Best of breed, or a CEO that I believe in.
3. When an opportunity presents itself-- I do the homework. I see what analysts think. How many analysts.. insider trading. positive outlook. a spin off. a new product or strategy.
4. I ask if I would buy their stuff myself.. If not-- no real large claim will go in it period. Maybe a small speculation play but that is it.
5. I have to be willing to sit in large plays for at least a year. In my 23% Disney case about five maybe more. If I just 100% followed what Im certain of I would be 100% Disney and that would be 100% foolish.

So you see there is a bit of room for intuition (the 90% of our brain), but rules to restrain impulsiveness.

I also do small speculations with Robinhood. I prefer using money like a single stock or $10 for the dollar stocks because doing paper simulations have no skin in the game and its different when you can actually lose something.

If you have hundreds of thousand you might not want to do this. In that case I just might be 95% index or mutual funds and  5% Disney. I know Im aggressive, but I don't think Im reckless. But one thing is sure, regardless of the amount, right now I would have Disney for a Looooong play.

Title: Re: Can't beat an Index
Post by: theoverlook on April 20, 2015, 08:38:02 AM

(http://ecx.images-amazon.com/images/I/41RH0EWPD3L._SX425_.jpg)
"people will think Apple invested it!"

I was right

(http://theinspirationroom.com/daily/commercials/2005/10/iPod-U2-video.jpg)


Yeah, but look at that Samsung thing!  It looks fucking terrible.  It looks like something a middle schooler bashed together out of left over parts in a red bull fueled weekend.  It looks like crap, and though I never used that specific device, I can almost guarantee that using it was an exercise in frustration.  In contrast the iPod STILL looks modern, and having used one for years - and STILL using a 2nd gen black and white iPod HD in my garage for tunes - I can vouch that in effect, Apple did invent the MP3 player because until then every other device was clunky, awful, and had some horrible kludgy way to put music on it.  They effectively had no competition when they came to market.

People like to point out that Apple doesn't invent anything.  Well, that's basically true of 100% of all technology companies.  Even the Archos and the Samsung shitshows were knock offs of other existing products.  The deal is, that when Apple "rips off" something, they do it well, even better than any of the devices they're "copying."

I had a tablet computer in 1993.  It was execrable.  It was one of the worst computing experiences I've ever had.  But when Apple launched the iPad, people were holding up all these prior tablets as some sort of proof that Apple doesn't do anything.  But the iPad was amazing, it looked like, felt like, and worked like the future.

What's the point of my rant?  Ugh, no point, just Monday morning procrastinating.
Title: Re: Can't beat an Index
Post by: GuitarStv on April 20, 2015, 11:11:16 AM
Myself, I'd would never invest in a company that I was also a fanboi of.  Seems like a recipe for disaster.
Title: Re: Can't beat an Index
Post by: Scandium on April 20, 2015, 11:24:33 AM

.. and had some horrible kludgy way to put music on it. 

You mean like ITUNES?!
oh gawd, worst software ever! What is it up to now? A 500 MB download? So glad I'm done with my ipod
Title: Re: Can't beat an Index
Post by: frugalnacho on April 20, 2015, 11:38:52 AM

.. and had some horrible kludgy way to put music on it. 

You mean like ITUNES?!
oh gawd, worst software ever! What is it up to now? A 500 MB download? So glad I'm done with my ipod

This.  I also dislike that I was limited to a single device that had to sync up with itunes.  I like using multiple computers.  Why is apple so dead set against me manually adding/deleting and managing my own music files?
Title: Re: Can't beat an Index
Post by: theoverlook on April 20, 2015, 11:39:58 AM

.. and had some horrible kludgy way to put music on it. 

You mean like ITUNES?!
oh gawd, worst software ever! What is it up to now? A 500 MB download? So glad I'm done with my ipod

Touché.
Title: Re: Can't beat an Index
Post by: dsmexpat on April 20, 2015, 11:47:13 AM
I grew up using computers, I've used them all my life and I cannot, despite hours of trying, make itunes work the way I'd like it to. Contrast that with the bad old days where mp3 players simply were a folder on my computer that you could open and drag and drop/copy and paste your albums into and I wonder why anyone puts up with itunes. It's designed to force you to use Apple to get your media by locking the devices into their portal. I'm sure it's intuitive to people who grew up only using iphones etc but it just doesn't work for me and I'm pretty tech savvy. Just let me drag and drop, I'll manage my files my way thank you.
Title: Re: Can't beat an Index
Post by: beltim on April 20, 2015, 01:48:34 PM
This.  I also dislike that I was limited to a single device that had to sync up with itunes.  I like using multiple computers.  Why is apple so dead set against me manually adding/deleting and managing my own music files?

Huh?  Since when have you not been able to do this?  I've had iTunes since about version 1 (I'm pretty sure I had SoundJam, the software iTunes was based on, before that) and I've never not been able to manually add, delete, and manage music files, on several computers, iPods, and iPhones.

Am I misunderstanding you?
Title: Re: Can't beat an Index
Post by: frugalnacho on April 20, 2015, 02:12:09 PM
This.  I also dislike that I was limited to a single device that had to sync up with itunes.  I like using multiple computers.  Why is apple so dead set against me manually adding/deleting and managing my own music files?

Huh?  Since when have you not been able to do this?  I've had iTunes since about version 1 (I'm pretty sure I had SoundJam, the software iTunes was based on, before that) and I've never not been able to manually add, delete, and manage music files, on several computers, iPods, and iPhones.

Am I misunderstanding you?

I was never able to.  When plugged in the ipod would automatically sync with the itunes account.  If I was at a friends house and wanted to put some music I couldn't just plug it into his computer and load the files.  I had to get the files and put them on my own computer, then hook up my ipod to my own computer so that it could sync with itunes.  IIRC there was no using the ipod as an external storage either, the only way to interface was via klunky itunes.  The whole process was overly restrictive and left a bad taste in my mouth.  I haven't owned an apple product in years (ok I still have an ipod, but I don't think it's been updated since 2012).
Title: Re: Can't beat an Index
Post by: beltim on April 20, 2015, 02:40:20 PM
This.  I also dislike that I was limited to a single device that had to sync up with itunes.  I like using multiple computers.  Why is apple so dead set against me manually adding/deleting and managing my own music files?

Huh?  Since when have you not been able to do this?  I've had iTunes since about version 1 (I'm pretty sure I had SoundJam, the software iTunes was based on, before that) and I've never not been able to manually add, delete, and manage music files, on several computers, iPods, and iPhones.

Am I misunderstanding you?

I was never able to.  When plugged in the ipod would automatically sync with the itunes account.  If I was at a friends house and wanted to put some music I couldn't just plug it into his computer and load the files.  I had to get the files and put them on my own computer, then hook up my ipod to my own computer so that it could sync with itunes.  IIRC there was no using the ipod as an external storage either, the only way to interface was via klunky itunes.  The whole process was overly restrictive and left a bad taste in my mouth.  I haven't owned an apple product in years (ok I still have an ipod, but I don't think it's been updated since 2012).

Weird.  Maybe it's different for Windows?  In addition to manually managing files, I've absolutely used an iPod as a nice portable hard drive. 
Title: Re: Can't beat an Index
Post by: cjottawa on April 20, 2015, 02:56:13 PM
From the site of William Bernstein, author of "Four Pillars of Investing" and "The Investor's Manifesto."

http://www.efficientfrontier.com/ef/900/15st.htm

Quote
...a grossly disproportionate fraction of the total return came from a very few "superstocks" like Dell Computer, which increased in value over 550 times. If you didn’t have one of the half-dozen or so of these in your portfolio, then you badly lagged the market. (The odds of owing one of the 10 superstocks are approximately one in six.) Of course, by owning only 15 stocks you also increase your chances of becoming fabulously rich. But unfortunately, in investing, it is all too often true that the same things that maximize your chances of getting rich also maximize your chances of getting poor.

If the O’Neal data are generalizable to stocks, and I believe that they are, then even 100 stocks are not nearly enough to eliminate this very important source of financial risk.

So, yes, Virginia, you can eliminate nonsytematic portfolio risk, as defined by Modern Portfolio Theory, with a relatively few stocks. It’s just that nonsystematic risk is only a small part of the puzzle. Fifteen stocks is not enough. Thirty is not enough. Even 200 is not enough. The only way to truly minimize the risks of stock ownership is by owning the whole market.
Title: Re: Can't beat an Index
Post by: Indexer on April 20, 2015, 06:44:32 PM
I would advise against boasting about your expertise if you haven't even read the works of some of the best thinkers out there.
Fair enough.. Im no expert. I will read more as time allows. I just might be a lucky bastard, but I am in fact beating the shit out of the market right now. For how long? Who knows... I often like to share good fortune but perhaps it not in my power to. I just might be lucky. I hope its not luck
[/URL]

Can you explain your investing strategy to the rest of us?   If you don't really have a concrete 'strategy' then it is luck.  And luck isn't something you should rely on going forward.  Luck just means the statistical odds played out in your favor.  Someone wins the lottery... that doesn't mean you should assume it will be you.

If you don't have a strategy... make one... or you are probably better off sticking with a target date fund.

Okay, first the bulk of my investments are mutual funds or index. I find index very alluring. I just happen to have a NAV benefit in one of the best mutual fund companies out there and I think I would have to be a fool not to use that NAV.

I like AMECX (currently, subject to change). It is a dividend income fund and when the market dips it dips less and it pays me 4.5% in dividends every year.

I also use Betterment for my safety net.. currently 100% stocks until April 28 or 29.. I will do a seasonal readjustment with them. TLT got a slight rise while stocks just took a hit.. the transfer is starting if this trend continues I will adjust sooner.

Now on stocks. It is a little hard to explain because I am using art not science. I am fishing or painting a stock picture not building a money making robot.

1. I keep my mind open and stay in financial news. This allows me to recognize opportunity
2. I stay with quality. Best of breed, or a CEO that I believe in.
3. When an opportunity presents itself-- I do the homework. I see what analysts think. How many analysts.. insider trading. positive outlook. a spin off. a new product or strategy.
4. I ask if I would buy their stuff myself.. If not-- no real large claim will go in it period. Maybe a small speculation play but that is it.
5. I have to be willing to sit in large plays for at least a year. In my 23% Disney case about five maybe more. If I just 100% followed what Im certain of I would be 100% Disney and that would be 100% foolish.

So you see there is a bit of room for intuition (the 90% of our brain), but rules to restrain impulsiveness.

I also do small speculations with Robinhood. I prefer using money like a single stock or $10 for the dollar stocks because doing paper simulations have no skin in the game and its different when you can actually lose something.

If you have hundreds of thousand you might not want to do this. In that case I just might be 95% index or mutual funds and  5% Disney. I know Im aggressive, but I don't think Im reckless. But one thing is sure, regardless of the amount, right now I would have Disney for a Looooong play.

Thank you.  :D   This sounds so much better than the Apple has 25,000% gains post that starts this topic.  I think a lot of us felt you were being reckless and that is why you might have felt some hostility in the replies.  While I don't agree with your investing strategy I don't feel it is reckless anymore. 
Title: Re: Can't beat an Index
Post by: VanTran on April 20, 2015, 07:21:58 PM
I love it when people use Buffet as evidence that "I too can beat the market!", when apparently it's so rare to beat the market over the long term, that when someone does it everyone knows their name!  If people want to throw money away at their fun dream of being the next Buffet, good luck!  But for the sake of the newbies in the forum (and there are a lot of them), I will continue to remind everyone how bad of an idea this is...especially in the context of early retirement.

I can name a bunch of people who beat the market with a value investing philosophy. It's not rocket science. You can also copy good investors via 13-F filings. Mohnish Pabrai makes a living by literally copying other people's ideas, and happens to be destroying the market over a long period. Since you seem to love evidence from academic studies, here's evidence of alpha that well-researched stock-picking can generate: http://www.retailinvestor.org/pdf/HedgeFund.pdf (http://www.retailinvestor.org/pdf/HedgeFund.pdf)
Title: Re: Can't beat an Index
Post by: theoverlook on April 21, 2015, 08:32:52 AM
This.  I also dislike that I was limited to a single device that had to sync up with itunes.  I like using multiple computers.  Why is apple so dead set against me manually adding/deleting and managing my own music files?

Huh?  Since when have you not been able to do this?  I've had iTunes since about version 1 (I'm pretty sure I had SoundJam, the software iTunes was based on, before that) and I've never not been able to manually add, delete, and manage music files, on several computers, iPods, and iPhones.

Am I misunderstanding you?

I was never able to.  When plugged in the ipod would automatically sync with the itunes account.  If I was at a friends house and wanted to put some music I couldn't just plug it into his computer and load the files.  I had to get the files and put them on my own computer, then hook up my ipod to my own computer so that it could sync with itunes.  IIRC there was no using the ipod as an external storage either, the only way to interface was via klunky itunes.  The whole process was overly restrictive and left a bad taste in my mouth.  I haven't owned an apple product in years (ok I still have an ipod, but I don't think it's been updated since 2012).

Weird.  Maybe it's different for Windows?  In addition to manually managing files, I've absolutely used an iPod as a nice portable hard drive.

We're quite off topic, obviously, but I've also been able to manually manage music files on the iPod just fine, it's in an option menu in iTunes.  I've also been able to use the iPod as removable storage just fine, ever since the 1st gen I had.  When it's hooked up you just browse to it like any other drive.  You can't put music on it that way, as a rights protection thing.

You can authorize your iPod on more than one computer.  You're only allowed 5 computers, I think.  Then you have to de-authorize a computer to add any more, and that will delete any DRM files on the iPod.

I do hate iTunes but find it's more usable for people that are NOT computer geeks.
Title: Re: Can't beat an Index
Post by: Dodge on April 21, 2015, 09:40:53 AM
I love it when people use Buffet as evidence that "I too can beat the market!", when apparently it's so rare to beat the market over the long term, that when someone does it everyone knows their name!  If people want to throw money away at their fun dream of being the next Buffet, good luck!  But for the sake of the newbies in the forum (and there are a lot of them), I will continue to remind everyone how bad of an idea this is...especially in the context of early retirement.

I can name a bunch of people who beat the market with a value investing philosophy. It's not rocket science. You can also copy good investors via 13-F filings. Mohnish Pabrai makes a living by literally copying other people's ideas, and happens to be destroying the market over a long period. Since you seem to love evidence from academic studies, here's evidence of alpha that well-researched stock-picking can generate: http://www.retailinvestor.org/pdf/HedgeFund.pdf (http://www.retailinvestor.org/pdf/HedgeFund.pdf)

Survivorship Bias - the single greatest fallacy in investing (http://forum.mrmoneymustache.com/investor-alley/survivorship-bias-the-single-greatest-fallacy-in-investing-35417/)

Good luck!
Title: Re: Can't beat an Index
Post by: VanTran on April 21, 2015, 11:34:26 AM
Haha, you didn't read solid evidence that contradicts your perception! I thought so.

I love it when people use Buffet as evidence that "I too can beat the market!", when apparently it's so rare to beat the market over the long term, that when someone does it everyone knows their name!  If people want to throw money away at their fun dream of being the next Buffet, good luck!  But for the sake of the newbies in the forum (and there are a lot of them), I will continue to remind everyone how bad of an idea this is...especially in the context of early retirement.

I can name a bunch of people who beat the market with a value investing philosophy. It's not rocket science. You can also copy good investors via 13-F filings. Mohnish Pabrai makes a living by literally copying other people's ideas, and happens to be destroying the market over a long period. Since you seem to love evidence from academic studies, here's evidence of alpha that well-researched stock-picking can generate: http://www.retailinvestor.org/pdf/HedgeFund.pdf (http://www.retailinvestor.org/pdf/HedgeFund.pdf)

Survivorship Bias - the single greatest fallacy in investing (http://forum.mrmoneymustache.com/investor-alley/survivorship-bias-the-single-greatest-fallacy-in-investing-35417/)

Good luck!
Title: Re: Can't beat an Index
Post by: Chuck on April 21, 2015, 11:59:49 AM


No timing needed?  Tell that to the person who bought in AAPL 1980 and underperformed the market for 26 years.
(http://i.imgur.com/ZupBW2o.png)
Brah. Check your own graph.

Someone who bought AAPL in 1980 is currently outperforming the market by nearly AN ORDER OF MAGNATUDE. See how the indicators on the Y Axis get closer together towards the top? That's because AAPL's outperformance of the market is too large to show to scale. It won't fit on your screen. I don't feel you've supported your argument.

The fact is that there are companies that outperform the market over the long term. IBM is one. Coca-Cola is one. Altria Group is one. Johnson and Johnson is one.

It looks increasingly likely that Apple will be one as well. It sure as hell is over the past 35 years.

Index funds are by far the safer bet. You are guaranteed not to pick a loser. But don't pretend that picking winners is impossible.
Title: Re: Can't beat an Index
Post by: frugalnacho on April 21, 2015, 12:24:51 PM


No timing needed?  Tell that to the person who bought in AAPL 1980 and underperformed the market for 26 years.
(http://i.imgur.com/ZupBW2o.png)
Brah. Check your own graph.

Someone who bought AAPL in 1980 is currently outperforming the market by nearly AN ORDER OF MAGNATUDE. See how the indicators on the Y Axis get closer together towards the top? That's because AAPL's outperformance of the market is too large to show to scale. It won't fit on your screen. I don't feel you've supported your argument.

The fact is that there are companies that outperform the market over the long term. IBM is one. Coca-Cola is one. Altria Group is one. Johnson and Johnson is one.

It looks increasingly likely that Apple will be one as well. It sure as hell is over the past 35 years.

Index funds are by far the safer bet. You are guaranteed not to pick a loser. But don't pretend that picking winners is impossible.

I checked his graph and it looks like apple did in fact underperform the market from 1980 until 2006 - 26 years, just as he claimed.  It's only since 2006 that the stock has had explosive growth and beat the market.  I think dodge's point is that in 2015 it's easy to look at apple and say you should have invested in it before the explosive growth, but who knew that back in 1980, or even 2006? You could have just as easily invested in Turd Inc. in 1980 and had your entire portfolio disappear along with the company.

Someone will be on an internet forum in 20 years making similar claims: "It's so easy, all you had to do was invest in Widgets Inc. in 2015 and you'd be a gajillionaire today!"

So what is the next apple that is going to make us all filthy rich?

Title: Re: Can't beat an Index
Post by: CCCA on April 21, 2015, 12:50:10 PM
Samsung is to Apple as Apple was to BlackBerry.


I would have to say that while it may have looked to some that this may be the case, at this point in time, your statement is demonstrably false.

Title: Re: Can't beat an Index
Post by: Dodge on April 21, 2015, 01:34:17 PM
Samsung is to Apple as Apple was to BlackBerry.


I would have to say that while it may have looked to some that this may be the case, at this point in time, your statement is demonstrably false.

His entire premise is that Samsung is behind Apple, just like Apple was behind Blackberry.  This is accurate.
Title: Re: Can't beat an Index
Post by: Dodge on April 21, 2015, 01:43:36 PM
Haha, you didn't read solid evidence that contradicts your perception! I thought so.

I love it when people use Buffet as evidence that "I too can beat the market!", when apparently it's so rare to beat the market over the long term, that when someone does it everyone knows their name!  If people want to throw money away at their fun dream of being the next Buffet, good luck!  But for the sake of the newbies in the forum (and there are a lot of them), I will continue to remind everyone how bad of an idea this is...especially in the context of early retirement.

I can name a bunch of people who beat the market with a value investing philosophy. It's not rocket science. You can also copy good investors via 13-F filings. Mohnish Pabrai makes a living by literally copying other people's ideas, and happens to be destroying the market over a long period. Since you seem to love evidence from academic studies, here's evidence of alpha that well-researched stock-picking can generate: http://www.retailinvestor.org/pdf/HedgeFund.pdf (http://www.retailinvestor.org/pdf/HedgeFund.pdf)

Survivorship Bias - the single greatest fallacy in investing (http://forum.mrmoneymustache.com/investor-alley/survivorship-bias-the-single-greatest-fallacy-in-investing-35417/)

Good luck!

I read it.  It's the same crap commonly touted by people who seem to acknowledge that only 1 in a million (whatever the % is) of people beat the market over the long term, yet simultaneously claim "it's not rocket science".  The Survivorship Bias link is the best response to such crap, and I'm hoping it saves a few investing newbies from following your path :)

But seriously, good luck!

(You'll need it)
Title: Re: Can't beat an Index
Post by: skyrefuge on April 21, 2015, 03:10:51 PM
I read it.

Really? Because I read it, and it's not the same crap I've seen anywhere before, and I'm not sure how "survivorship bias" has anything to do with it.

I was actually very excited to read it, because it finally investigates the last refuge of the investing scoundrel. In the olden days, everyone just assumed that skilled investors could easily beat the market. Then data reveals that mutual funds can't do it, so the investing scoundrel retreats to "ohhh, yeah, they can't do it because they get too big and too public, but privately people can still do it. You're looking at the wrong data". Then the data reveals that hedge funds can't do it, so the investing scoundrel retreats to "ohhh, yeah, they can't do it with all their fat bonuses and trading costs, but individual buy-and-hold investors can still do it. You're looking at the wrong data. (and no one better come up with a way to analyze a group of individual buy-and-hold investors, because I have nowhere left to retreat to!)"

So hey, this was actually a pretty reasonable data-set to use to analyze that last refuge, in which many of the individual stock-picking investors at this forum are holed up. And damn, the paper revealed some pretty impressive results. Following the picks made by the people at this Value Investor Club didn't just result in like a 0.9% outperformance or underperformance that we're used to seeing in studies like this.  They found numbers like a 10%/year outperformance. So even if there is some "survivorship bias" or other flaw to the study that cuts the actual outperformance in half, it still seems like a number that's unlikely to completely disappear.

The authors definitely seem biased (they work for an investment-management company), and there were some minor errors that left me a little uncomfortable (randomly switching voice from "we" to "I" within the paper; derisively pointing out an investor who suggested an investment in Lehman Bros after they'd filed for bankruptcy, even though, in fact Lehman had not yet filed by the time of his suggestion; and no curiosity about the fact that the outperformance seemed to slow/stop in the 3rd year after the idea was presented, and 3 years was as long as they looked). But there's nothing that seems like a giant error to me.

Though another minor thing that bothered me was that, in 2008, they were publishing 3-year performance of data from 2008. Huh? So I checked the link to the SSRN database included in the intro to the PDF to see if they just had the dates wrong in this draft or something.

Hmm, except the paper is no longer hosted at SSRN. I did a search for the primary author, and came up this, Do Fund Managers Identify and Share Profitable Ideas? (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1499341), a paper by the same authors and a similar title, published a year later (and last revised 3 years after that, in 2012).

Curious.

It uses the same data source (valueinvestorclub.com "ideas"), but uses a different analysis method. This time, the result is FAR different, and much more in that "0.9%" sort of range: "We find evidence of stock-picking skill among VIC members....However, the abnormal returns are restricted to small securities. For example, the average one-year value-weight calendar-time portfolio alpha estimate is 0.73% for buy recommendations....in the smallest quintile of firms."

So we went from pretty strong evidence of individual skill to, at best, the creation of yet another, tinier refuge to which the scoundrel can still retreat.

Given that they make no reference to their original paper in this new one, that leaves me with even less faith in their credibility, so I'm not terribly motivated to understand what was wrong with their initial methodology and why they switched to a new one. But given their admitted bias, I'm quite confident that this methodogy that produced less-impressive results is the more "correct" of the two.

JoJoK, as the proponent of these researchers, perhaps you'd like to explain?
Title: Re: Can't beat an Index
Post by: Dodge on April 21, 2015, 03:34:48 PM
I read it.

Really? Because I read it, and it's not the same crap I've seen anywhere before, and I'm not sure how "survivorship bias" has anything to do with it.

I was actually very excited to read it, because it finally investigates the last refuge of the investing scoundrel. In the olden days, everyone just assumed that skilled investors could easily beat the market. Then data reveals that mutual funds can't do it, so the investing scoundrel retreats to "ohhh, yeah, they can't do it because they get too big and too public, but privately people can still do it. You're looking at the wrong data". Then the data reveals that hedge funds can't do it, so the investing scoundrel retreats to "ohhh, yeah, they can't do it with all their fat bonuses and trading costs, but individual buy-and-hold investors can still do it. You're looking at the wrong data. (and no one better come up with a way to analyze a group of individual buy-and-hold investors, because I have nowhere left to retreat to!)"

So hey, this was actually a pretty reasonable data-set to use to analyze that last refuge, in which many of the individual stock-picking investors at this forum are holed up. And damn, the paper revealed some pretty impressive results. Following the picks made by the people at this Value Investor Club didn't just result in like a 0.9% outperformance or underperformance that we're used to seeing in studies like this.  They found numbers like a 10%/year outperformance. So even if there is some "survivorship bias" or other flaw to the study that cuts the actual outperformance in half, it still seems like a number that's unlikely to completely disappear.

The authors definitely seem biased (they work for an investment-management company), and there were some minor errors that left me a little uncomfortable (randomly switching voice from "we" to "I" within the paper; derisively pointing out an investor who suggested an investment in Lehman Bros after they'd filed for bankruptcy, even though, in fact Lehman had not yet filed by the time of his suggestion; and no curiosity about the fact that the outperformance seemed to slow/stop in the 3rd year after the idea was presented, and 3 years was as long as they looked). But there's nothing that seems like a giant error to me.

Though another minor thing that bothered me was that, in 2008, they were publishing 3-year performance of data from 2008. Huh? So I checked the link to the SSRN database included in the intro to the PDF to see if they just had the dates wrong in this draft or something.

Hmm, except the paper is no longer hosted at SSRN. I did a search for the primary author, and came up this, Do Fund Managers Identify and Share Profitable Ideas? (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1499341), a paper by the same authors and a similar title, published a year later (and last revised 3 years after that, in 2012).

Curious.

It uses the same data source (valueinvestorclub.com "ideas"), but uses a different analysis method. This time, the result is FAR different, and much more in that "0.9%" sort of range: "We find evidence of stock-picking skill among VIC members....However, the abnormal returns are restricted to small securities. For example, the average one-year value-weight calendar-time portfolio alpha estimate is 0.73% for buy recommendations....in the smallest quintile of firms."

So we went from pretty strong evidence of individual skill to, at best, the creation of yet another, tinier refuge to which the scoundrel can still retreat.

Given that they make no reference to their original paper in this new one, that leaves me with even less faith in their credibility, so I'm not terribly motivated to understand what was wrong with their initial methodology and why they switched to a new one. But given their admitted bias, I'm quite confident that this methodogy that produced less-impressive results is the more "correct" of the two.

JoJoK, as the proponent of these researchers, perhaps you'd like to explain?

As usual, excellent analysis skyrefuge!

It screams Survivorship Bias to me, because it discounts all the people who followed similar strategies, and failed.  The paper examines the return of the Value Investor Club, a private club of investors who all invest similarly (based on "fundamentals" or value).  Even worse, their definition of "long-term" leaves much to be desired:

------------------------------------------
In this section we examine the performance of the recommendations made by VIC members. VIC recommendations typically state that their ideas should be considered “long- term” investments and not short term trades. To capture this notion of long-term performance, we perform detailed return calculations on horizons of one-, two-, and three-years.
------------------------------------------

Pointing to a small group of people, who all invest based on value, who beat the market over a 3 year period, when value in general also out performed the market, screams Survivorship Bias.  It also screams Crap.

Looking forward to JoJoK's explanation.
Title: Re: Can't beat an Index
Post by: mrpercentage on April 21, 2015, 08:56:16 PM
Samsung is to Apple as Apple was to BlackBerry.


I would have to say that while it may have looked to some that this may be the case, at this point in time, your statement is demonstrably false.

His entire premise is that Samsung is behind Apple, just like Apple was behind Blackberry.  This is accurate.

Samsung does a lot of things. My computer screen is Samsung, my TV's, and even my refrigerator. I think it may swing the other way soon. While I don't think Apple will bother with a fridge they will make some TV's at some point. Samsung is a great company but it is very diversified and has stiff competition. Meanwhile Apple has streamlined its lineup making sure only quality is offered (Think In & Out Burger) only a few good things on the menu right.

my monitor
(http://i820.photobucket.com/albums/zz124/azwolf25/IMG_1303.jpg) (http://s820.photobucket.com/user/azwolf25/media/IMG_1303.jpg.html)
my fridge
(http://i820.photobucket.com/albums/zz124/azwolf25/IMG_1302.jpg) (http://s820.photobucket.com/user/azwolf25/media/IMG_1302.jpg.html)
my TV
(http://i820.photobucket.com/albums/zz124/azwolf25/IMG_1301.jpg) (http://s820.photobucket.com/user/azwolf25/media/IMG_1301.jpg.html)
Title: Re: Can't beat an Index
Post by: VanTran on April 21, 2015, 08:56:55 PM
How can you claim "survivorship bias!" when the study adequately controls for it? There's nothing different from what PE firms and value investors are doing, so where is your evidence that analysis is pointless in the public market? Either you can look at stocks as a piece of a business (which they are), or just a piece of paper. If a stock is a piece of a business, why spray-and-pray when you have the opportunity to invest in good businesses for a bargain price? Correct me if I'm wrong, but you seem to view stocks as pieces of paper. In that case, the stock market is just one big Ponzi scheme, so what's the point in even investing in an index? and what would be the difference in flipping Beanie Babies and stocks? In my view, value investing is just like arbitrage. You don't need to be Renaissance Technologies or insider info to find them.

So hey, this was actually a pretty reasonable data-set to use to analyze that last refuge, in which many of the individual stock-picking investors at this forum are holed up. And damn, the paper revealed some pretty impressive results. Following the picks made by the people at this Value Investor Club didn't just result in like a 0.9% outperformance or underperformance that we're used to seeing in studies like this.  They found numbers like a 10%/year outperformance. So even if there is some "survivorship bias" or other flaw to the study that cuts the actual outperformance in half, it still seems like a number that's unlikely to completely disappear.

The authors definitely seem biased (they work for an investment-management company), and there were some minor errors that left me a little uncomfortable (randomly switching voice from "we" to "I" within the paper; derisively pointing out an investor who suggested an investment in Lehman Bros after they'd filed for bankruptcy, even though, in fact Lehman had not yet filed by the time of his suggestion; and no curiosity about the fact that the outperformance seemed to slow/stop in the 3rd year after the idea was presented, and 3 years was as long as they looked). But there's nothing that seems like a giant error to me.

Though another minor thing that bothered me was that, in 2008, they were publishing 3-year performance of data from 2008. Huh? So I checked the link to the SSRN database included in the intro to the PDF to see if they just had the dates wrong in this draft or something.

Hmm, except the paper is no longer hosted at SSRN. I did a search for the primary author, and came up this, Do Fund Managers Identify and Share Profitable Ideas? (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1499341), a paper by the same authors and a similar title, published a year later (and last revised 3 years after that, in 2012).

Curious.

It uses the same data source (valueinvestorclub.com "ideas"), but uses a different analysis method. This time, the result is FAR different, and much more in that "0.9%" sort of range: "We find evidence of stock-picking skill among VIC members....However, the abnormal returns are restricted to small securities. For example, the average one-year value-weight calendar-time portfolio alpha estimate is 0.73% for buy recommendations....in the smallest quintile of firms."

So we went from pretty strong evidence of individual skill to, at best, the creation of yet another, tinier refuge to which the scoundrel can still retreat.

Given that they make no reference to their original paper in this new one, that leaves me with even less faith in their credibility, so I'm not terribly motivated to understand what was wrong with their initial methodology and why they switched to a new one. But given their admitted bias, I'm quite confident that this methodogy that produced less-impressive results is the more "correct" of the two.

JoJoK, as the proponent of these researchers, perhaps you'd like to explain?

Hi skyrefuge, great points. I'm not sure if your first paragraph is sarcastic, but I could explain those points further if you'd like. I'm not particularly a fan of quantitative research on stocks because it completely ignores qualitative factors that imo are the biggest contributors to outperformance. But, I only posted this study to show the statistical significance in 'skills pay the bills.'

Regarding inconsistencies, it is annoying in an academic paper. But I know that smart guys like Robert Reich make these mistakes as well, so I can't shit on them for that. Even the best lecturers say "the reason is because" or "he's taller than me."

On timeframe: unfortunately, studies like this are limited because you can't quantitatively model a variety of buying and selling strategies. Turtle Creek says their outperformance has a lot to do with these strategies. They have a study on achieving a 70%+ CAGR on 1 stock for 10 years. Not everyone on VIC posts an exit recommendation, but I'd imagine the holding period for many stocks is less than 3-years. Overtime, the outperformance of individual stocks may thin because of changing business conditions (ex: NIHD was a 10+ bagger when Charlie479 sold, now bankrupt) or the stock went up too fast, and time is compensating for that (ex: KO, if Buffett didn't have such a large stake, he would've sold a long time ago). Also, many times, the value gap closes pretty quickly; Andreas947's picks are good examples of that (many of his picks acquired).

On the conclusion of the revised paper: I absolutely agree and base my investment decisions on the premise that small securities are more likely to generate abnormal returns. I understand if you think the conclusion is some lame excuse, but there is logic to it. I like reading VIC to learn and as a source of ideas, but usually ignore everything that's not a small-cap. Why? Large caps are more likely efficient because of high institutional ownership and interest, large following by retail investors, and lots of analyst coverage that models every little detail. Now on to small-caps and below: more likely to be inefficient because of low to no institutional ownership, no analyst coverage, and a tiny following by retail investors. Institutions are usually not interested because of illiquidity and a position in the stock is not going to move the scales. The alpha comes from discovery: when the stock keeps performing well, it eventually attracts interest from investors with deep pockets, traders, potential acquirers, and eventually institutions when the size and liquidity are acceptable. From a capital flow perspective, the potential pool of capital is huge for good, small stocks. For large stocks, there is a smaller amount of new money %wise, thus less potential for abnormal returns. I'm sure I have more to say on this, but I'm tired from typing this rant.

I have a good, recent example of how inefficient the small cap space is: MSPD. Despite the many interested 3rd parties, aligned management, A-team banker working on strategic alternatives, huge margin of safety from sum-of-parts valuation and low EV/EBIT, and NOLs that an acquirer would love, the stock got no attention from the market. To top it off, in October '13 I noticed unusual options activity for the DEC13 $5.00 calls when the stock was below $3/share. The insider trading couldn't have made it more obvious. In November '13 the company was acquired for $5.05/share.
Title: Re: Can't beat an Index
Post by: Dodge on April 21, 2015, 09:35:03 PM
How can you claim "survivorship bias!" when the study adequately controls for it?

I gave my reasoning.  Is it your assertion that the study adequately controls for Survivorship Bias, by looking at a single private investing group, which invests in a single type of strategy, over a short time period in which that single strategy type beat the market overall?  If so, you don't understand the definition of Survivorship Bias.

I only posted this study to show the statistical significance in 'skills pay the bills.'

If you believe looking at a single private investing group, can show a statistical significance, I genuinely urge you to read about Survivorship Bias - the single greatest fallacy in investing (http://forum.mrmoneymustache.com/investor-alley/survivorship-bias-the-single-greatest-fallacy-in-investing-35417/).
Title: Re: Can't beat an Index
Post by: skyrefuge on April 22, 2015, 11:03:37 AM
On the conclusion of the revised paper: I absolutely agree and base my investment decisions on the premise that small securities are more likely to generate abnormal returns. I understand if you think the conclusion is some lame excuse, but there is logic to it.

I appreciate the response, and I agree with you that the timeframes analyzed are not unreasonable (though it would have been nice to see at least a discussion on why they used the timeframes they did).

But you didn't quite answer what I was looking for, which is my fault for not being explicit enough.

Since you linked to the original draft (which showed enormous abnormal returns), I took that to mean that you trusted its conclusion. Thus I'm a bit surprised to hear you now aligning yourself only with the revised paper, which shows far lower abnormal returns, and only in a limited area.

I was expecting an explanation for why you found the methodology in the original paper trustworthy, and the revised paper's methodology untrustworthy.

But now I'm guessing you simply weren't aware of the revised paper until now? If so, why do you still hold any faith in the conclusions of researchers who already were apparently abysmally wrong at least once?

And all that is in service of answering the question "why should *I* (or anyone else) hold any faith in even their revised, far-more-limited conclusions?"

Title: Re: Can't beat an Index
Post by: skyrefuge on April 22, 2015, 11:06:56 AM
I gave my reasoning.  Is it your assertion that the study adequately controls for Survivorship Bias, by looking at a single private investing group, which invests in a single type of strategy, over a short time period in which that single strategy type beat the market overall?  If so, you don't understand the definition of Survivorship Bias.

I still don't get this. Essentially you seem to be saying that you don't trust any research that uses statistical analysis? You require data from every single unit of the entire population in order to not cry "survivorship bias"? "I don't trust that the polio vaccine actually works, since it was only tested on a 'single' group of kids!"

Yes, this research relies on a "single" investing group (and since almost all investing is "private", I don't get why that's an issue either; this group is actually far less "private" than most other sources of individual-stock-picker data, which is why it was used). But while it's a "single" group, it's a collection of hundreds of independent investors, and thousands of their "ideas".

For there to be "survivorship bias" in selecting this group, there would have to be other such groups who were analyzed but not published (due to not delivering the "right" conclusion). Or those other groups would have had to have died out, which seems unlikely, since there really isn't any pressure from performance requirements that would cause poorly-performing groups to be closed more frequently than better-performing ones. Are you aware of any other groups that these researchers should have included?

And for there to be "survivorship bias" in selecting the "ideas" produced by the group, "ideas" that time had proven to be bad would have had to be wiped from the database. I see no reason to believe that happened.

The papers also make it clear that, while buy-and-hold "value" investing is a general theme, there is definitely more than a "single" strategy. Though analysis of that general theme is really what we want anyway, since, at least around here, buy-and-hold "value" investing is really the only strategy in which there remains any reasonable debate. There aren't many proponents of day-trading or technical-analysis left here, so it wouldn't be very interesting to study those strategies.

Obviously it would be nice to see the research repeated and confirmed with a different population, but just because that hasn't been done, that doesn't mean "survivorship bias! worthless!"
Title: Re: Can't beat an Index
Post by: brooklynguy on April 23, 2015, 07:36:22 AM
I still don't get this. Essentially you seem to be saying that you don't trust any research that uses statistical analysis? You require data from every single unit of the entire population in order to not cry "survivorship bias"?

Yeah.  The concept of survivorship bias, important as it may be for the prudent investor to be cognizant of, seems to be getting a little overhyped around here.  I think its jump the shark moment was the creation of two duplicate threads dedicated to the topic in the span of two weeks.

First, survivorship bias is only one of the many species of selection bias, so the inordinate focus on it itself represents a bias in the selection of selection biases on which to focus!

Second, as skyrefuge pointed out, survivorship bias is merely a type of sampling error that can occur when doing statistical analysis.  In its absence, it can't be used as a sword against any observational study (or, worse yet, any experiment) that reaches the conclusion that a given cause produced a given result.

Quote
at least around here, buy-and-hold "value" investing is really the only strategy in which there remains any reasonable debate. There aren't many proponents of day-trading or technical-analysis left here, so it wouldn't be very interesting to study those strategies.

Perhaps you haven't noticed the Dual Momentum thread that's been raging on the front page of Investor Alley for the past two weeks?
Title: Re: Can't beat an Index
Post by: Dodge on April 23, 2015, 11:43:54 PM
I gave my reasoning.  Is it your assertion that the study adequately controls for Survivorship Bias, by looking at a single private investing group, which invests in a single type of strategy, over a short time period in which that single strategy type beat the market overall?  If so, you don't understand the definition of Survivorship Bias.
For there to be "survivorship bias" in selecting this group, there would have to be other such groups who were analyzed but not published (due to not delivering the "right" conclusion). Or those other groups would have had to have died out, which seems unlikely, since there really isn't any pressure from performance requirements that would cause poorly-performing groups to be closed more frequently than better-performing ones.

I see this as further evidence of how elusive Survivorship Bias can be.

------------------------------------------
It is easy to fall victim to the Survivorship Bias.  After any process that leaves behind survivors, the non-survivors are often destroyed or muted or removed from your view. If failures becomes invisible, then naturally you will pay more attention to successes. Not only do you fail to recognize that what is missing might have held important information, you fail to recognize that there is missing information at all.

http://youarenotsosmart.com/2013/05/23/survivorship-bias/
------------------------------------------

In explaining why they choose this private investing group in particular, they say:

"The site has been heralded in many business publications as a top-quality resource for those who can attain membership (e.g. Financial Times, Barron’s, Business Week, and Forbes)."

I suspect sites who gave poor-performing advice, didn't end up in the Financial Times, Barron's, Business Week, or Forbes.  If so, they fell victim to Survivorship Bias.
Title: Re: Can't beat an Index
Post by: brooklynguy on April 24, 2015, 09:14:41 AM
I see this as further evidence of how elusive Survivorship Bias can be.

Dodge, you seem to have become so enamored in the idea of the pervasiveness and invisibility of survivorship bias that you are starting to see it where it doesn't exist.

I agree with you that there may have been survivorship bias in the selection of this group (and have less confidence than skyrefuge that there was no survivorship bias in that respect) -- maybe there were other otherwise-equivalent investing clubs which died out because they sucked at stock picking?  Or maybe there was another form of selection bias at work in the selection of this sample-group.

But I agree with skyrefuge in that I see no reason to believe there was survivorship bias in the selection of the ideas produced by this group.

Essentially, the methodology these researchers used was as follows:  they looked at stock-picking ideas produced and self-ranked by a group of investors (which admittedly may not be representative of the investing population as a whole), and examined whether the high-ranked ideas outperformed the low-ranked ideas, and found that they did.  (Thanks to skyrefuge's sleuthing, we now know that there was a subsequent study that gives us reason to suspect that there may have been other flaws in the initial study's methodology, and I look forward to seeing whether JoJoK has any light to shed on that issue.)

To extend skyrefuge's vaccine analogy, this study was analogous to examining a subset of the population, some members of whom were given the vaccine, and some members of whom were not, and finding that a statistically significantly higher percentage of the non-vaccinated members contracted the disease.  Is it your view that "survivorship bias" means we cannot trust those results to show that the vaccine has the effect of reducing a group-member's chances of contracting the disease?  It's true that if there was selection bias in the choosing of the sample group, the results cannot necessarily be extrapolated to the population as a whole (e.g., if everyone in the sample group happened to be a Cherokee Indian, then perhaps the vaccine would not have the same effect on the wider, genetically-distinguishable, population).  But it is reasonable to conclude that within the sample group, the vaccine either caused disease-resistance or was correlated with some other factor that caused disease-resistance.

Do you have any reason to believe there was survivorship bias in the selection of the ideas produced by this group?  It seems to me that the entire universe of stock-picking-ideas produced by the group was examined, and the researchers found that the high-ranked ideas outperformed the low-ranked ideas.  If there were no other flaws in the methodology, it would be reasonable to conclude that the high-ranked stock-picking ideas outperformed the low-ranked stock-picking-ideas because the stock-picking-idea-rankers were actually good at picking stocks in a better than random way.
Title: Re: Can't beat an Index
Post by: Dodge on April 24, 2015, 10:05:14 AM
I see this as further evidence of how elusive Survivorship Bias can be.

Dodge, you seem to have become so enamored in the idea of the pervasiveness and invisibility of survivorship bias that you are starting to see it where it doesn't exist.

I agree with you that there may have been survivorship bias in the selection of this group (and have less confidence than skyrefuge that there was no survivorship bias in that respect) -- maybe there were other otherwise-equivalent investing clubs which died out because they sucked at stock picking?  Or maybe there was another form of selection bias at work in the selection of this sample-group.

But I agree with skyrefuge in that I see no reason to believe there was survivorship bias in the selection of the ideas produced by this group.

Essentially, the methodology these researchers used was as follows:  they looked at stock-picking ideas produced and self-ranked by a group of investors (which admittedly may not be representative of the investing population as a whole), and examined whether the high-ranked ideas outperformed the low-ranked ideas, and found that they did.  (Thanks to skyrefuge's sleuthing, we now know that there was a subsequent study that gives us reason to suspect that there may have been other flaws in the initial study's methodology, and I look forward to seeing whether JoJoK has any light to shed on that issue.)

To extend skyrefuge's vaccine analogy, this study was analogous to examining a subset of the population, some members of whom were given the vaccine, and some members of whom were not, and finding that a statistically significantly higher percentage of the non-vaccinated members contracted the disease.  Is it your view that "survivorship bias" means we cannot trust those results to show that the vaccine has the effect of reducing a group-member's chances of contracting the disease?  It's true that if there was selection bias in the choosing of the sample group, the results cannot necessarily be extrapolated to the population as a whole (e.g., if everyone in the sample group happened to be a Cherokee Indian, then perhaps the vaccine would not have the same effect on the wider, genetically-distinguishable, population).  But it is reasonable to conclude that within the sample group, the vaccine either caused disease-resistance or was correlated with some other factor that caused disease-resistance.

Do you have any reason to believe there was survivorship bias in the selection of the ideas produced by this group?  It seems to me that the entire universe of stock-picking-ideas produced by the group was examined, and the researchers found that the high-ranked ideas outperformed the low-ranked ideas.  If there were no other flaws in the methodology, it would be reasonable to conclude that the high-ranked stock-picking ideas outperformed the low-ranked stock-picking-ideas because the stock-picking-idea-rankers were actually good at picking stocks in a better than random way.

It looks like we're on the same page brooklynguy.  There were two decisions here.  The decison to choose this particular investing group, then the decision of how to analyze the data.  I only see Survivorship Bias in the former.
Title: Re: Can't beat an Index
Post by: CCCA on April 27, 2015, 05:18:04 PM


No timing needed?  Tell that to the person who bought in AAPL 1980 and underperformed the market for 26 years.
(http://i.imgur.com/ZupBW2o.png)
Brah. Check your own graph.

Someone who bought AAPL in 1980 is currently outperforming the market by nearly AN ORDER OF MAGNATUDE. See how the indicators on the Y Axis get closer together towards the top? That's because AAPL's outperformance of the market is too large to show to scale. It won't fit on your screen. I don't feel you've supported your argument.

The fact is that there are companies that outperform the market over the long term. IBM is one. Coca-Cola is one. Altria Group is one. Johnson and Johnson is one.

It looks increasingly likely that Apple will be one as well. It sure as hell is over the past 35 years.

Index funds are by far the safer bet. You are guaranteed not to pick a loser. But don't pretend that picking winners is impossible.

I checked his graph and it looks like apple did in fact underperform the market from 1980 until 2006 - 26 years, just as he claimed.  It's only since 2006 that the stock has had explosive growth and beat the market.  I think dodge's point is that in 2015 it's easy to look at apple and say you should have invested in it before the explosive growth, but who knew that back in 1980, or even 2006? You could have just as easily invested in Turd Inc. in 1980 and had your entire portfolio disappear along with the company.

Someone will be on an internet forum in 20 years making similar claims: "It's so easy, all you had to do was invest in Widgets Inc. in 2015 and you'd be a gajillionaire today!"

So what is the next apple that is going to make us all filthy rich?


Not necessarily filthy rich, but a reasonable person could have concluded that after the introduction of the iPhone in 2007, that maybe Apple would have a big hit on it's hands.  And if someone had invested in AAPL after the Steve Jobs announcement, the stock price has appreciated by >800%, whereas VTI (total stock market) is around 54%.  Even if you waited a couple of years (beginning of 2010) just to see that the iPhones were, in fact, selling, you would have seen a 350% appreciation vs the market (96%).


I'm lucky to have invested in Apple during its earlier and more recent growth.  But I also know that lots of people don't "get" Apple and its stock.  There's always been the narrative that since Samsung/Dell (or whoever) can put the same or even "better" parts in their computer/MP3 player/phone and sell it for cheaper, that Apple is always about to be beaten and fail.  But this narrative, perpetuated by the media and analysts, always struck me, and many others, as being incorrect.  So some of that "luck" has been the result of learning as much as I can about these companies and markets and also faith that over time this narrative will fade.


I will say that it never occurred to me that Apple would one day be the biggest company on the planet.





Title: Re: Can't beat an Index
Post by: Captain_Burrito_Pants on April 27, 2015, 11:54:36 PM
It's not especially difficult to outperform the stock market for 3 years in a row.

0.5 * 0.5 * 0.5 = 1/8 chance of beating the market over 3 years even if your picks are completely random.  So any study that looks at such a short time period is useless.


Here's for the AAPL fans.
(http://img16.imagefra.me/i34s/cvi7_a2c_u1.jpg)
Title: Re: Can't beat an Index
Post by: lemanfan on April 28, 2015, 12:15:24 AM
I for one am very happy with the returns from my Apple stock so far - but I've started slowly selling and purchasing more long term holdings.

In 50 years, many of todays big industrial and consumer companies will probably be around - but the long term success of companies like Google and Apple are harder to predict.
Title: Re: Can't beat an Index
Post by: Druid on April 28, 2015, 12:20:42 AM
This.  I also dislike that I was limited to a single device that had to sync up with itunes.  I like using multiple computers.  Why is apple so dead set against me manually adding/deleting and managing my own music files?

Huh?  Since when have you not been able to do this?  I've had iTunes since about version 1 (I'm pretty sure I had SoundJam, the software iTunes was based on, before that) and I've never not been able to manually add, delete, and manage music files, on several computers, iPods, and iPhones.

Am I misunderstanding you?

I was never able to.  When plugged in the ipod would automatically sync with the itunes account.  If I was at a friends house and wanted to put some music I couldn't just plug it into his computer and load the files.  I had to get the files and put them on my own computer, then hook up my ipod to my own computer so that it could sync with itunes.  IIRC there was no using the ipod as an external storage either, the only way to interface was via klunky itunes.  The whole process was overly restrictive and left a bad taste in my mouth.  I haven't owned an apple product in years (ok I still have an ipod, but I don't think it's been updated since 2012).

I have the same experience. My theory is it is an anti piracy thing. They are trying to keep people from using the ipod from being able to download endless songs from various friends computers. There is a work around that is painfully annoying that involves downloading the files from the computer and manually entering them in itunes. I have been to lazy to do it for the second time. It is possible that the technology has changed(my ipod is 5 years old)
Title: Re: Can't beat an Index
Post by: Druid on April 28, 2015, 12:34:31 AM
I don't intend to pick a side on this whole Survivorship Bias thing, but I will say that most studies are corrupt now days. Studies are more aimed to be a marketing device than a device of knowledge. The financial industry has the money to produce some convincing studies, pay the media financial analysts, and a whole other range of marketing activities. Every industry does it, so I am not hating on the financial industry. I even think it is possible that there are some really useful studies out there, but I am not foolish enough to make life decisions based on one and I try to stay skeptical when I can.
Title: Re: Can't beat an Index
Post by: CCCA on April 28, 2015, 10:32:48 AM
This.  I also dislike that I was limited to a single device that had to sync up with itunes.  I like using multiple computers.  Why is apple so dead set against me manually adding/deleting and managing my own music files?

Huh?  Since when have you not been able to do this?  I've had iTunes since about version 1 (I'm pretty sure I had SoundJam, the software iTunes was based on, before that) and I've never not been able to manually add, delete, and manage music files, on several computers, iPods, and iPhones.

Am I misunderstanding you?

I was never able to.  When plugged in the ipod would automatically sync with the itunes account.  If I was at a friends house and wanted to put some music I couldn't just plug it into his computer and load the files.  I had to get the files and put them on my own computer, then hook up my ipod to my own computer so that it could sync with itunes.  IIRC there was no using the ipod as an external storage either, the only way to interface was via klunky itunes.  The whole process was overly restrictive and left a bad taste in my mouth.  I haven't owned an apple product in years (ok I still have an ipod, but I don't think it's been updated since 2012).

I have the same experience. My theory is it is an anti piracy thing. They are trying to keep people from using the ipod from being able to download endless songs from various friends computers. There is a work around that is painfully annoying that involves downloading the files from the computer and manually entering them in itunes. I have been to lazy to do it for the second time. It is possible that the technology has changed(my ipod is 5 years old)


I haven't had an ipod in awhile, but on my iPhone you can add songs individually in iTunes without syncing.  I think it's probably the same with ipods as well. 
https://support.apple.com/en-us/HT201593
Title: Re: Can't beat an Index
Post by: Chuck on April 28, 2015, 08:39:47 PM

What fundamentals did Apple have... EVER... that suggested it would do what it did?
When I purchased the stock they had a P/E of 10. Without factoring in their 80 billion dollar cash hoard. They were posting yoy 20% growth. The stock had just dropped 6% because reasons.

Fundamentals are no guarantee of success, but some bets are a hell of a lot safer than others.
Title: Re: Can't beat an Index
Post by: aspiringnomad on April 28, 2015, 10:09:33 PM

What fundamentals did Apple have... EVER... that suggested it would do what it did?
When I purchased the stock they had a P/E of 10. Without factoring in their 80 billion dollar cash hoard. They were posting yoy 20% growth. The stock had just dropped 6% because reasons.

Fundamentals are no guarantee of success, but some bets are a hell of a lot safer than others.

Same here. And the fundamentals still look good compared to other tech companies. Not too long ago, AAPL had a lower P/E than MSFT (may still be the case, too lazy to look up).
Title: Re: Can't beat an Index
Post by: CCCA on May 05, 2015, 06:39:07 PM
Nice article here about what people don't get about Apple.
http://kensegall.com/2015/05/one-day-theyll-understand-apple/
Title: Re: Can't beat an Index
Post by: clifp on May 05, 2015, 07:09:21 PM
I was hoping someone would mention that individual stock picking can be fun.  Once I show an individual stock picker that they are almost statistically guaranteed to lose money vs the index over the long term...it suddenly becomes less fun for them!

Do you think mrpercentage would still have fun picking individual stocks if he/she consistently earned less money each and every year, over the next 30-50 years, despite all the extra work?

But that isn't what you have shown. The fact that actively managed fund are very unlikely to beat index funds, tells us virtually nothing about the ability of individuals picking individual stocks to outperform index on absolute or risk adjusted basis. Funds aren't people they are made up of a collection of fund manager, analyst etc. who on average stay only a few years.  There have been almost no studies tracking the performance of individuals.

Now obviously on aggregate individual aren't going to beat the market.  But there are individual who are better at selecting stocks than others, Warren Buffett talked them many years ago in his famous speech the Superinvestors of Graham and DoddsVille. http://www.tilsonfunds.com/superinvestors.html (http://www.tilsonfunds.com/superinvestors.html)
Title: Re: Can't beat an Index
Post by: beltim on May 05, 2015, 07:19:01 PM
Are you sure you meant to respond to me?
Title: Re: Can't beat an Index
Post by: Dodge on May 05, 2015, 07:52:56 PM
Once I show an individual stock picker that they are almost statistically guaranteed to lose money vs the index over the long term...it suddenly becomes less fun for them!

But that isn't what you have shown.

On what are you basing this statement?  How do you know what I've shown when I talk to individual stock pickers?
Title: Re: Can't beat an Index
Post by: mrpercentage on May 05, 2015, 09:29:02 PM
AAPL destroyed the quarter with earnings
DIS was "way" better than expected

so far as expected.. yep

Im buying a little now and a little more Mid May and Mid September-- I bet. Expect some loss followed by a rocket ride when people realize they were retarded for leaving after great numbers are repeated-- again

Title: Re: Can't beat an Index
Post by: clifp on May 06, 2015, 02:19:43 AM
Are you sure you meant to respond to me?

Sorry it was primarily to Dodge the levels of quotation got confusing. I editing my post to make it clearer.
Title: Re: Can't beat an Index
Post by: NICE! on May 06, 2015, 04:35:28 AM
When I purchased the stock they had a P/E of 10. Without factoring in their 80 billion dollar cash hoard. They were posting yoy 20% growth. The stock had just dropped 6% because reasons.

At least you're talking about fundamentals. OP finally kind of articulated a strategy after much agitation by the rest of the posters, but it really sounds like it is all based upon intuition, which he claims is 'only' 90%.

And now we have OP insulting everyone using inappropriate terminology ("retarded").

...and he still hasn't said anything about P/E, growth vs income, efficient market theory, Fama/French factors, technical investing, behavorial finance, or anything like that!
Title: Re: Can't beat an Index
Post by: mrpercentage on May 06, 2015, 06:32:26 AM
The 90% of my brain. Yeah. Just happens to be supported by fundamentals now. Imagine that.

Sorry I will try to be more PC. My time serving reduced words like retarded to G rated levels.

Title: Re: Can't beat an Index
Post by: NICE! on May 06, 2015, 01:48:19 PM
My time serving reduced words like retarded to G rated levels.

What? This sentence doesn't make sense.
Title: Re: Can't beat an Index
Post by: Jags4186 on May 06, 2015, 02:20:55 PM
I'm curious if the OP would be willing to sit on an underperforming stock for 30 years before getting the "payoff".

My bet is I won't need to wait 30 years for a stock to (hopefully) explode for me to have enough to get out of the rat race.

Here's my biggest problem with AAPL.  It's just time a matter of time until it becomes Microsoft.  There's just only so much money people can spend on its products.  First its a $600 phone, now a $350 watch onto of the $600 phone.   The iPhone will become Windows/Microsoft Office.  If you bought MSFT between 1990 and 1995 you're a genius.  If you bought it in 2000...well sorry buddy.  Where are we now with AAPL?  Who knows.

AAPL will eventually run out of new products.  There will eventually be a cooler product than the iPhone and my bet is someone else will come up with it.  Who?  I have no idea.  That's why I index.
Title: Re: Can't beat an Index
Post by: beltim on May 06, 2015, 02:25:08 PM
I'm curious if the OP would be willing to sit on an underperforming stock for 30 years before getting the "payoff".

My bet is I won't need to wait 30 years for a stock to (hopefully) explode for me to have enough to get out of the rat race.

Here's my biggest problem with AAPL.  It's just time a matter of time until it becomes Microsoft.  There's just only so much money people can spend on its products.  First its a $600 phone, now a $350 watch onto of the $600 phone.   The iPhone will become Windows/Microsoft Office.  If you bought MSFT between 1990 and 1995 you're a genius.  If you bought it in 2000...well sorry buddy.  Where are we now with AAPL?  Who knows.

AAPL will eventually run out of new products.  There will eventually be a cooler product than the iPhone and my bet is someone else will come up with it.  Who?  I have no idea.  That's why I index.

To be fair, that's what people have been saying about Apple since Windows gained more market share than Apple operating systems. 
Title: Re: Can't beat an Index
Post by: forummm on May 06, 2015, 02:37:49 PM
My time serving reduced words like retarded to G rated levels.

What? This sentence doesn't make sense.

Why did you pick that one?
Title: Re: Can't beat an Index
Post by: NICE! on May 06, 2015, 04:00:16 PM
Why did you pick that one?

Ha, word.
Title: Re: Can't beat an Index
Post by: mrpercentage on May 06, 2015, 06:55:46 PM
Lets introduce some Neitzche. It's not always about self preservation. Sometimes its about growth. Will Apple grow as much as last year? Doubtful, but I bet it hits 15% or more. 15% is a good year in my book. I think it is worth being a little unsafe-- even though-- I don't think Apple is really dangerous. They have been constantly underestimated for years now. While I won't throw everything I have at it, I will add a little on dips such as these. Adding in growth is a series of diminishing returns-- I look for the dip. Investment strategies are based on specific goals. Mine is growth

I will leave you with the Superman
https://youtu.be/wRz8l-Ojs70?t=7m40s

also-- Thought I should add Im about at my personal portfolio max for AAPL and DIS. I will be buying into JPM, F, BA, and KR most likely. I have a few others in mind but limited cash. That is what I am doing.. Im not recommending those to anyone.
Title: Re: Can't beat an Index
Post by: Indexer on May 06, 2015, 07:45:00 PM
I don't think Apple is really dangerous. They have been constantly underestimated for years now.

Are we talking about the same company?


1.  Richest company in the world.  Check.
2.  Founder is worshipped and has multiple movies about him.  Check.
3.  People set up tents outside their stores.  Check.
4.  They make an expensive product that has to be replaced constantly, but people just want more.  Check.
5.  Just made an $18,000 watch that will be obsolete in less than a year but people still want it.  Check.
6.  People CONSTANTLY make topics on finance forums/blogs about the stock.  Check.
7.  ... then claim the company is underestimated and/or the underdog.  Check.

I don't think anyone has underestimated them since at least 2007.  If anything people have only underestimated their cult followers devotion.
Title: Re: Can't beat an Index
Post by: NICE! on May 07, 2015, 12:47:35 AM
Lets introduce some Neitzche. It's not always about self preservation. Sometimes its about growth.

Nietzsche has absolutely nothing to do with this. When I said philosophy, I didn't mean for you to make opaque philosophy 101 references. I meant what is your overall investment strategy.
Title: Re: Can't beat an Index
Post by: mrpercentage on May 07, 2015, 04:02:14 AM
Do you have a specific question Nice?

I have the feeling you want me to give you a checklist of some sort.
Well what is your checklist for an attractive woman? They are judged by individual merit right. You don't have a formula for them do you?

I invest in companies I find attractive at an attractive price.

Do I read the quarterlies? Do I check their numbers? Sure. Depends on how much Im investing really. Single share on speculation I might not look at all. I might just be trying some new bright idea.

Long term large amount-- I look.

F-- higher dividend stock I know, will be successfull over time, not expecting a rocket-- good company-- end of story
BA-- just took a hit, like the space race, war play, commerical play, book value-- love how solid-- it pisses success
JPM-- the only bank I haven't personally fired and I think some financial belongs in my portfolio-- more dividends
KR-- still looking, seems a little overpriced but is thriving in a toxic environment and I shop there. Cramer said he is buying some tomorrow. I need to look more into it.

Something like that?

Title: Re: Can't beat an Index
Post by: NICE! on May 08, 2015, 02:30:57 PM
I have the feeling you want me to give you a checklist of some sort.
Well what is your checklist for an attractive woman? They are judged by individual merit right. You don't have a formula for them do you?

Comparing human beings with investing is preposterous.

Quote
Do I read the quarterlies? Do I check their numbers? Sure. Depends on how much Im investing really. Single share on speculation I might not look at all. I might just be trying some new bright idea.

That doesn't make sense. It shouldn't matter if you buy $1000 or $100MM, you should do the research and make decisions based upon your investment philosophy, which has yet to be articulated. You kinda sound like a value investor that throws 'hunches' and 'expert' opinions into the mix, along with how you feel on a given day (such as if something "pisses success."

Quote
Cramer said he is buying some tomorrow. I need to look more into it.

Cramer's picks are not worth following: http://www.cbsnews.com/news/jim-cramer-still-wont-make-you-rich/
Title: Re: Can't beat an Index
Post by: mrpercentage on May 08, 2015, 07:11:23 PM

Quote
Comparing human beings with investing is preposterous.
Maybe. I don't think they are the same thing. However, everything is interconnected-- especially reason.
Quote
That doesn't make sense. It shouldn't matter if you buy $1000 or $100MM, you should do the research and make decisions based upon your investment philosophy, which has yet to be articulated. You kinda sound like a value investor that throws 'hunches' and 'expert' opinions into the mix, along with how you feel on a given day (such as if something "pisses success."

Here we disagree. I do not have one formula I apply to everything. I explore many. Reading it in a book is not good enough for me. I want to try it. I want to try to steal a dividend without owning a stock for a long term. I want to try a speculation when I think a company got slammed by sector blanket sells when it doesn't deserve to be sold and will quickly rebound. (Im looking at you SDRL and I wish I held you longer and used a larger amount  and same sith SNSS and now NM. Fuck it, yes, Im betting against the recent trend against coal transports). Make no mistake-- speculation is related to gambling and that is why I will not use 20% of my hard earned money to do it.

Quote
Cramer's picks are not worth following: http://www.cbsnews.com/news/jim-cramer-still-wont-make-you-rich/

On Cramer:
I learn a lot from Cramer. He is a bright guy with really good supporting staff. When I watch Cramer I keep these things in mind:
1. Entertainment adds the pressure of having to do something all the time even when he knows the best choice is do nothing
2. A lot of his picks or recommendations come from his staff-- not him
3. He must constantly reinvent the show to explore all areas of "investing" to maintain interest and boost ratings.
4. He has rules in place about what he can and can not mention. He can't mention stocks with a micro cap for example because he could literally blow up there value with a recommendation (Im looking at you ESCA ;)
5. He is put on the spot (him and his staff anyway) on making recommendation on buying and selling any stock in the stock market without the time to do thorough research.

That being said, there is a lot to learn from him. There is a lot to learn from the guests he brings on and the macro and micro views he covers. He has connections and knows what some of the key players are doing. While he doesn't say everything out right, he does give you some tells, if you play poker. Im not a big gambler. I prefer the odds being in my favor (Im looking at you stock market).

Anyways, I like the idea of value, but Im not an expert. There are better people to discuss analysis with. I lean towards playing aggressively for gains while maintaining a margin of safety the best I know how. I like to stick with things I know about-- companies I know don't treat their customers like crap. Bank of America might be a value stock but they will never get my money. Maybe that makes me a fool and not a true value investor. I like to take the whole picture into context- not just the Q reports or balance sheets-- although they certainly have merit.

My intuition tells me that the biggest players use more of their gut then they are willing to tell you. They can't tell you that they did it because they felt like it was a good idea. You might lose confidence in them. They will come up with all kinds of Monday-Morning-Quarterback stuff to tell you why they saw it when no one else did. I bet the truth is they had a hunch-- they used the 90% of their brain. Sometimes the facts and balance sheets support it--even better.
Title: Re: Can't beat an Index
Post by: mrpercentage on May 08, 2015, 09:31:48 PM
Okay, I think I know what you mean by philosophy now.

1. Stick with what I know for the bulk of investments.
2. Use value on big purchases.
3. Don't be afraid to experiment just don't use a lot of capital.
4. Keep an open mind. A full cup spills when you try to add to it so don't think I have it all figured out.
5. Keep a big view as part of the decision. Don't let it be just about numbers.
6. Never short. It is a zero sum game. You are probably stealing a spooked employees retirement. In hunting it would be killing a pregnant doe. It destroys good companies sometimes. Bad. I will vote to make it illegal if I ever have that option.
7. Avoid companies with really bad business practices. If you get lost in only profits you will build in habits that lose in the long term.
8. Generally think long term
9. Stay away from borrowing. Leveraged plays are credit card gambling. I have experimented with small amounts and its really easy to get bit
10. Don't invest money you actually need in the next few years. You might need to wait out a bad market.
Title: Re: Can't beat an Index
Post by: aspiringnomad on May 08, 2015, 10:02:33 PM

I don't think anyone has underestimated them since at least 2007.  If anything people have only underestimated their [customers'] devotion.

Same same, but different. Customers + devotion = sales growth. Sales growth for a company with great margins = strong profit growth. Profit growth above estimations, ceteris paribus = share price appreciation.

I replaced "cult followers" with "customers" because you can't accuse a company of simultaneously being a cult and a mass market sensation.
Title: Re: Can't beat an Index
Post by: aspiringnomad on May 08, 2015, 10:10:19 PM
6. Never short. It is a zero sum game. You are probably stealing a spooked employees retirement. In hunting it would be killing a pregnant doe. It destroys good companies sometimes. Bad. I will vote to make it illegal if I ever have that option.

Don't think I've ever heard this one. I don't short because I generally limit individual stock moves to where I really believe in the fundamentals of the company, but I think that shorting plays an important role in the marketplace. What about puts? Are you against those too?
Title: Re: Can't beat an Index
Post by: mrpercentage on May 09, 2015, 03:17:00 PM
6. Never short. It is a zero sum game. You are probably stealing a spooked employees retirement. In hunting it would be killing a pregnant doe. It destroys good companies sometimes. Bad. I will vote to make it illegal if I ever have that option.

Don't think I've ever heard this one. I don't short because I generally limit individual stock moves to where I really believe in the fundamentals of the company, but I think that shorting plays an important role in the marketplace. What about puts? Are you against those too?
I won't question the morality of day trading. I do think we have a responsibility to remove things that accelerate a crash because it is not speculTion money we are playing with. Now 90% of the worlds retirement money is sloshing around in there. If someone (long term retirement investor) gets burned bad enough they stop investing. (This is the killing of the pregnant doe). Now a source of future growth has been removed. Many people do have their companies stock as their default and do the very human thing when they see it get hit 50%. So I want no part of the dark side. Accelerating loss to instill fear selling and creating long term societal problems for short sided profits is not my thing. I could just be lucky or maybe it's one of the reasons this fool is blessed
Title: Re: Can't beat an Index
Post by: mrpercentage on May 15, 2015, 08:44:52 PM
What happens when you just keep investing in the same company? Started with 10,000 and added 1200 a year.

(http://i820.photobucket.com/albums/zz124/azwolf25/Screen%20Shot%202015-05-15%20at%207.38.09%20PM.jpg) (http://s820.photobucket.com/user/azwolf25/media/Screen%20Shot%202015-05-15%20at%207.38.09%20PM.jpg.html)
Title: Re: Can't beat an Index
Post by: Dodge on May 15, 2015, 09:19:11 PM
What happens when you just keep investing in the same company? Started with 10,000 and added 1200 a year.

(http://i820.photobucket.com/albums/zz124/azwolf25/Screen%20Shot%202015-05-15%20at%207.38.09%20PM.jpg) (http://s820.photobucket.com/user/azwolf25/media/Screen%20Shot%202015-05-15%20at%207.38.09%20PM.jpg.html)

This is why Survivorship Bias is the single greatest fallacy in investing (http://forum.mrmoneymustache.com/investor-alley/survivorship-bias-the-single-greatest-fallacy-in-investing-35417/).  If Disney hadn't had that recent explosion, you never would've decided to graph it.  Think about it this way, if Disney had gone out of business in 2008, giving all of their business to Universal Studios Theme Park, you would instead be showing us the chart for that company instead.  When you fall victim to Survivorship Bias, you end up charting whichever stock did well over the last X years, regardless of the circumstances.

While this might be a fun exercise, it's a validated loser when it comes to investing strategies.  You want to be in those companies before the explosion.  Unless you can read the future (you can't), the only way to ensure you'll be in before the explosion, is with the index.
Title: Re: Can't beat an Index
Post by: mrpercentage on May 15, 2015, 09:32:00 PM
Okay,
question 1. Does Disney have a lower draw down?
question 2. Did Disney at least match the S&P 500 most of the time?

I have to go to work so I will have to respond later to any further pursuits
Title: Re: Can't beat an Index
Post by: NICE! on May 17, 2015, 05:20:20 AM
question 2. Did Disney at least match the S&P 500 most of the time?

Is the S&P 500 the right measuring stick for Disney?

Once again, you're all over the place. As I've stated before, there's no systematic thought going on with what you're saying here. You're also refusing to attribute some of these picks to luck (unless you had insider info, you didn't know about the Star Wars purchase in advance) and a 5+ year runaway bull market and record-high corporate profits.

Basically you're just throwing stuff at a wall and seeing what sticks. That's kinda what was described in A Random Walk Down Wall Street.
Title: Re: Can't beat an Index
Post by: mrpercentage on May 17, 2015, 08:28:12 PM
The thing a Random Walk Down Wallstreet keeps pointing out is the benefit of buy and holding. They consistently point to index which is a very safe bet and will help you sleep at night. It does also say that rewards and risk go hand in hand. Take a step out of the box and you see the combination of throwing darts at the board and holding( like you would an index) can indeed be very powerful as long as you still maintain some diversity. It only takes one big winner, a couple that went out of business, some that underperformed, with some that slightly beat the market-- to really beat the market.

The argument presented in the book is slanted. They point to buying and holding for index then compare to trading with stocks or being undeversified in stocks. Don't get me wrong indexing is a great way to build wealth. It is a very smart option, but it is still an option-- not the only way
Title: Re: Can't beat an Index
Post by: dungoofed on May 17, 2015, 08:48:07 PM
Dude you're all over the place, channeling Joshua Kennon here, channeling Peter Lynch there.

You're welcome to present your case here for your single stock picking strategy and see if it stands up to scrutiny. You even have the distinct advantage that you know in advance almost to the letter the questions that people here will ask. See the Dual Momentum Investing thread for an example of how a position, acknowledging the weaknesses and risks, can be defended when compared to indexing.

But what you're doing here isn't helping your case. You will struggle with any argument that requires you to know something the rest of the market doesn't know.
Title: Re: Can't beat an Index
Post by: mrpercentage on May 17, 2015, 09:00:40 PM
Dude you're all over the place, channeling Joshua Kennon here, channeling Peter Lynch there.

I explore different Ideas sure. I reject conformity. I don't like being told I can't do something. Every successful person was told they couldn't do it at the start. You don't have to agree with my strategy. I think I have already told all of you what it is. I acknowledge the validity of your strategies. Im not sure you recognize the difference between the two.
Title: Re: Can't beat an Index
Post by: NICE! on May 18, 2015, 12:41:26 AM
...

You didn't answer his points. Also, this isn't some High School conformity/non-conformity situation. What in the world are you talking about?
Title: Re: Can't beat an Index
Post by: frugalnacho on May 18, 2015, 07:39:46 AM
The thing a Random Walk Down Wallstreet keeps pointing out is the benefit of buy and holding. They consistently point to index which is a very safe bet and will help you sleep at night. It does also say that rewards and risk go hand in hand. Take a step out of the box and you see the combination of throwing darts at the board and holding( like you would an index) can indeed be very powerful as long as you still maintain some diversity. It only takes one big winner, a couple that went out of business, some that underperformed, with some that slightly beat the market-- to really beat the market.

The argument presented in the book is slanted. They point to buying and holding for index then compare to trading with stocks or being undeversified in stocks. Don't get me wrong indexing is a great way to build wealth. It is a very smart option, but it is still an option-- not the only way

What the hell are you rambling about? The point everyone is trying to make is that you (you specifically mrpercentage) don't know which way the market is going to move, and you don't know which specific stocks are going to be big winners or losers.  Disney and apple are clear winners to you, but that's because they are huge winners and everyone else already knows it because they have been growing like gangbusters.  You probably have some real stinkers in your portfolio too.  If not then I still wouldn't rule out dumb luck.

If you extend your investment period out to 30 or 40 years the odds you being able to "pick winners" is going to be balanced out by you also picking turds that under perform.  In fact the sum total of all your picks over that time period is probably going to under perform a buy and hold index strategy because of transaction fees.  That is true of everyone that is out there investing in stocks over a sufficiently long period, how could it not be?  After all, you ARE the market.  All the buying you do feeds directly into the market, which is just the sum total off all individuals buying and selling. 

If you think you are smarter and better at picking under valued stocks than most other people then carry on.  I doubt your long term ability to consistently beat the market though. 
Title: Re: Can't beat an Index
Post by: theoverlook on May 18, 2015, 07:50:01 AM
You mean, what if you used hindsight to pretend that you put all your money into a stock that did well?  Sure it looks great!

But unless we're masturbating here, it doesn't make sense.  Plenty of people put all their money into Enron.  Ask them how that worked out for them.  People that owned an index owned some Enron.  Ask them how that worked out for them.  I can probably figure out how they would answer - can you?
Title: Re: Can't beat an Index
Post by: Indexer on May 19, 2015, 07:19:30 PM
Dude you're all over the place, channeling Joshua Kennon here, channeling Peter Lynch there.

I explore different Ideas sure. I reject conformity. I don't like being told I can't do something. Every successful person was told they couldn't do it at the start. You don't have to agree with my strategy. I think I have already told all of you what it is. I acknowledge the validity of your strategies. Im not sure you recognize the difference between the two.

Explore different ideas.  I encourage it.  Bogle explored different ideas.... now we have Vanguard.  MMM explored different ideas.... now we have this forum.  However these ideas were backed up by data.  Bogle had a mathematical proof that over long periods of time indexers as a group would outperform active traders as a group.  He started an index fund.  Decades of performance proved him right, and now two of his index funds are the largest mutual funds in the world.  MMM had a high income and low expenses, and he retired very young.  Benjamin Graham(followed by Buffet) had an idea to invest only in value companies that were out of favor and ignore ideas that weren't supported in logic(like bubbles and crashes).  He consistently outperformed the market... except during bubbles because he stayed away from the mania.... and Buffet has done roughly the same thing.  He also ignored 'hot stocks' like Facebook like they were the plague... which they normally ended up turning into.  What all of these ideas have in common is that the people did their homework and they did a lot of math.

What you are doing is not a different idea.  Do you think you are the first person to invest based on your gut?  Do you think you are the first investor to start investing during a bull market and then think you are a wizard because you performed well.  There were people in 1999(funny we picked that year in the other thread) who bought companies they knew the ticker symbols for... but not the names.... and they did AMAZING!  If you were invested primarily in tech or healthcare the past 5 years you would be dominating the market.  So far you have listed investing in Apple, Facebook, and Disney. 
Title: Re: Can't beat an Index
Post by: mrpercentage on May 20, 2015, 05:06:58 AM
I like Facebook over Twitter but don't own either. I hear you loud and clear though.  Apple and Disney are my only real recommendations. I own more obviously. I like F, NM, MAT.  I think they are all undervalued with a big dividend. None will cut you a profit tomorrow. NM is a bit risky but it's price to book is 0.34 and its dividend has risen to 6%-- and its in Europe.

If you don't mind me asking. What is the best index for a taxable account? I'm thinking of treating my retirement account and taxable account as two different strategies not two parts of the same.

One more  thought. If you plan to hold for 20 years there isn't a single report that means anything. You have to have unshakable faith in the business and nothing more.
Title: Re: Can't beat an Index
Post by: forummm on May 20, 2015, 06:07:51 AM
One more  thought. If you plan to hold for 20 years there isn't a single report that means anything. You have to have unshakable faith in the business and nothing more.

Buffett keeps a close eye on his companies and sells them when needed. Like TESCO.

"You've got to know when to hold 'em. Know when to fold 'em. Know when to walk away. And know when to run." --Kenny Rogers
Title: Re: Can't beat an Index
Post by: GuitarStv on May 20, 2015, 06:09:54 AM
The single report that the company you hold has gone under should probably mean something.  It's not an uncommon one, and it happens to many companies that nobody thought could fail . . .
Title: Re: Can't beat an Index
Post by: mrpercentage on May 20, 2015, 06:47:47 AM
Correct. But there isn't a single report that says this company is good for 20 years. You know what tells you to go long. You do. You might see something but it is not in a report. If it's in the report Watson can see it better and I'm sure Buffet has dibs on that.
Title: Re: Can't beat an Index
Post by: NICE! on May 20, 2015, 11:14:07 AM
If you don't mind me asking. What is the best index for a taxable account? I'm thinking of treating my retirement account and taxable account as two different strategies not two parts of the same.

This question is what makes me think you aren't listening and you aren't reading. It betrays a complete lack of consideration for asset allocation, modern portfolio theory, or any basic strategic thought on the overall portfolio (other than tax considerations, at least you're considering that). What do you mean "best index?" What asset class? What sector? What's your risk tolerance? What's your time horizon? Etc. Etc. Etc.

Essentially you're asking us for a stock pick (replace stock w/index and voila), which is what you're trying to give us. We're trying to tell you that we're not big fans of picks.
Title: Re: Can't beat an Index
Post by: Scandium on May 20, 2015, 11:37:28 AM
Correct. But there isn't a single report that says this company is good for 20 years. You know what tells you to go long. You do. You might see something but it is not in a report. If it's in the report Watson can see it better and I'm sure Buffet has dibs on that.

uhm, so what tells you a company is good for 20 years? You've said Disney, so what tells you they'll be a success in 20 years? That people like disney films right now? The first 3 star wars where hits, the next 3 where shaite. So who knows how the next 3 will go. .
Title: Re: Can't beat an Index
Post by: surfhb on May 20, 2015, 01:16:44 PM
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Title: Re: Can't beat an Index
Post by: Scandium on May 20, 2015, 01:34:20 PM
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..
Title: Re: Can't beat an Index
Post by: forummm on May 20, 2015, 02:35:51 PM
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

They also need more princesses. They've already done princesses under the sea, in a swamp, in the snow, in a tower, in a library, in a coma, in Arabia, etc. They are running out of places for princesses to be. Maybe a princess in space?
Title: Re: Can't beat an Index
Post by: Chuck on May 20, 2015, 02:42:13 PM
I don't think Apple is really dangerous. They have been constantly underestimated for years now.

Are we talking about the same company?


1.  Richest company in the world.  Check.
2.  Founder is worshipped and has multiple movies about him.  Check.
3.  People set up tents outside their stores.  Check.
4.  They make an expensive product that has to be replaced constantly, but people just want more.  Check.
5.  Just made an $18,000 watch that will be obsolete in less than a year but people still want it.  Check.
6.  People CONSTANTLY make topics on finance forums/blogs about the stock.  Check.
7.  ... then claim the company is underestimated and/or the underdog.  Check.

I don't think anyone has underestimated them since at least 2007.  If anything people have only underestimated their cult followers devotion.
P/E ratio that is a 40% discount on the S&P500. Yes, they really are still undervalued despite their following, precisely because so many like yourself are suspicious.
Title: Re: Can't beat an Index
Post by: skyrefuge on May 20, 2015, 03:32:03 PM
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

And from Disney's perspective, they already paid George Lucas a $4 billion "load" in order to be allowed to make this "investment". So in order to truly be an investing "hit", the returns on their money have to overcome the drag of that enormous load. They have to believe that "the return rate on Star Wars" exceeds "the return rate on anything else we could do" by an amount large enough to overcome that load. If Lucas had simply made the movies himself, he wouldn't have had that load to overcome, so his threshold for "success" would have been lower.
Title: Re: Can't beat an Index
Post by: surfhb on May 20, 2015, 04:10:06 PM
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

And from Disney's perspective, they already paid George Lucas a $4 billion "load" in order to be allowed to make this "investment". So in order to truly be an investing "hit", the returns on their money have to overcome the drag of that enormous load. They have to believe that "the return rate on Star Wars" exceeds "the return rate on anything else we could do" by an amount large enough to overcome that load. If Lucas had simply made the movies himself, he wouldn't have had that load to overcome, so his threshold for "success" would have been lower.

Off topic a little but does anyone think Disney got a enormous deal on that purchase?   I was shocked at the price at first
Title: Re: Can't beat an Index
Post by: Scandium on May 20, 2015, 04:19:40 PM
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

And from Disney's perspective, they already paid George Lucas a $4 billion "load" in order to be allowed to make this "investment". So in order to truly be an investing "hit", the returns on their money have to overcome the drag of that enormous load. They have to believe that "the return rate on Star Wars" exceeds "the return rate on anything else we could do" by an amount large enough to overcome that load. If Lucas had simply made the movies himself, he wouldn't have had that load to overcome, so his threshold for "success" would have been lower.

Off topic a little but does anyone think Disney got a enormous deal on that purchase?   I was shocked at the price at first
Yeah, kinda. I'm sure he made more than that in the sale of Jarjar Binks figures alone. And they got the valuable rights to Big Whoop as well..
Title: Re: Can't beat an Index
Post by: skyrefuge on May 20, 2015, 04:40:49 PM
Off topic a little but does anyone think Disney got a enormous deal on that purchase?   I was shocked at the price at first

I was the opposite actually. When the deal was announced (technically $4.05B), I pointed out that the "0.05" on there is FIFTY MILLION DOLLARS! And questioned if any single person in human history had been given $4B.  "How would you like that payment, Mr. Lucas? Cash? 11 tons of $100 dollar bills? A dozen brand-new 747s? 16,000 modest single-family homes?"

Especially since it was $4.05B simply for an idea. In a land without the entirely-artificial concept of intellectual property, Disney would have paid $0 and simply gone ahead and made its own Star Wars movies.

But, given that Disney's stock price barely moved after the announcement, apparently the market thought we were both wrong, and thinks that exchanging 4.05 billion dollars for the right to make Star Wars movies was a perfectly fair trade for both parties.
Title: Re: Can't beat an Index
Post by: forummm on May 20, 2015, 04:51:11 PM
Off topic a little but does anyone think Disney got a enormous deal on that purchase?   I was shocked at the price at first

I was the opposite actually. When the deal was announced (technically $4.05B), I pointed out that the "0.05" on there is FIFTY MILLION DOLLARS! And questioned if any single person in human history had been given $4B.  "How would you like that payment, Mr. Lucas? Cash? 11 tons of $100 dollar bills? A dozen brand-new 747s? 16,000 modest single-family homes?"

Especially since it was $4.05B simply for an idea. In a land without the entirely-artificial concept of intellectual property, Disney would have paid $0 and simply gone ahead and made its own Star Wars movies.

But, given that Disney's stock price barely moved after the announcement, apparently the market thought we were both wrong, and thinks that exchanging 4.05 billion dollars for the right to make Star Wars movies was a perfectly fair trade for both parties.

Thanks to Disney's constant lobbying (to protect copyrights for Mickey Mouse), they had to pay Lucas all that cash in order to get Star Wars.

I think it's a good investment. They can get a ton of juice off of it not only from the movies (which will probably each gross over $1 billion internationally even before getting to DVD sales and premium channels), but from the rides at the theme parks, the merchandise, etc. I had a conference at the Disney property, and some kids were walking around with light sabers and R2D2 mouse ears and a Yoda doll, etc. They will make their money back.
Title: Re: Can't beat an Index
Post by: Cathy on May 20, 2015, 05:03:22 PM
Nintendo is currently valued at about $26 billion on the free market. A very significant fraction of that is the so-called intellectual property of their popular game franchises and characters including Mario, Zelda, Donkey Kong, and friends. Mario alone is likely worth more than Star Wars.

This post is not making a point. It's just fascinating to consider how valuable that character is.
Title: Re: Can't beat an Index
Post by: forummm on May 20, 2015, 06:18:05 PM
Nintendo is currently valued at about $26 billion on the free market. A very significant fraction of that is the so-called intellectual property of their popular game franchises and characters including Mario, Zelda, Donkey Kong, and friends. Mario alone is likely worth more than Star Wars.

This post is not making a point. It's just fascinating to consider how valuable that character is.

And Mickey is worth many times more than any of them.

You can extend the analogy a bit. Coke for example is really intellectual property. There's no real value to it, but they've spent decades targeting ads and packaging and product placements to get you to think it's special, along with loading it with sugar and caffeine so you get those drugs acting in concert as well. It's just sugar water, dye, and chemicals. Yet they get people all over the world to fork over $50 billion in cash for it and other products like bottled water (which comes from the same municipal sources your tap water does) each year.
Title: Re: Can't beat an Index
Post by: Indexer on May 20, 2015, 06:19:40 PM
I don't think Apple is really dangerous. They have been constantly underestimated for years now.

Are we talking about the same company?


1.  Richest company in the world.  Check.
2.  Founder is worshipped and has multiple movies about him.  Check.
3.  People set up tents outside their stores.  Check.
4.  They make an expensive product that has to be replaced constantly, but people just want more.  Check.
5.  Just made an $18,000 watch that will be obsolete in less than a year but people still want it.  Check.
6.  People CONSTANTLY make topics on finance forums/blogs about the stock.  Check.
7.  ... then claim the company is underestimated and/or the underdog.  Check.

I don't think anyone has underestimated them since at least 2007.  If anything people have only underestimated their cult followers devotion.
P/E ratio that is a 40% discount on the S&P500. Yes, they really are still undervalued despite their following, precisely because so many like yourself are suspicious.

And I've made the exact same argument you are making in another topic where someone was saying Apple was overvalued ;).  I'm not saying it's a bad company.  Apple is a value compared to the overall market.  I think the reason is that it's already really big and established.  There is room to grow, but at this point another doubling or tripling of size looks less likely than it did in the past.   So I'm not saying Apple is a bad stock.  I'm saying that preaching people have been underestimating Apple is like saying the New England Patriots were underestimated going into the super bowl... its something a superfan might say... but the rest of world just rolls their eyes. 


Quote from: mrpercentage
If you don't mind me asking. What is the best index for a taxable account? I'm thinking of treating my retirement account and taxable account as two different strategies not two parts of the same.

VTSAX  Vanguard Total Stock index admiral shares(or the ETF=VTI).  Cost 0.05%.  Almost 3800 companies.  Super tax efficient.  Since it contains small, mid, large, and mega cap you don't have to rebalance the sub asset allocations which means less trading and less taxable events.  It does distribute dividends but qualified dividends are normally taxed at a lower rate than your income.
Title: Re: Can't beat an Index
Post by: aspiringnomad on May 20, 2015, 10:06:25 PM
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

They also need more princesses. They've already done princesses under the sea, in a swamp, in the snow, in a tower, in a library, in a coma, in Arabia, etc. They are running out of places for princesses to be. Maybe a princess in space?

Princess in space covered by Star Wars acquisition. :)
Title: Re: Can't beat an Index
Post by: forummm on May 21, 2015, 07:11:06 AM
All 6 Star Wars films were incredible hits.    From an investing standpoint the next 3 will likely be hits as well :)
Yeah, probably. But they have to be bigger hits than is already expected and priced into the stock. And that only covers the next ~5 years, still another 15 of guesswork..

They also need more princesses. They've already done princesses under the sea, in a swamp, in the snow, in a tower, in a library, in a coma, in Arabia, etc. They are running out of places for princesses to be. Maybe a princess in space?

Princess in space covered by Star Wars acquisition. :)

Oh right! I totally forgot about that.
Title: Re: Can't beat an Index
Post by: GuitarStv on May 21, 2015, 08:06:32 AM
They also need more princesses. They've already done princesses under the sea, in a swamp, in the snow, in a tower, in a library, in a coma, in Arabia, etc. They are running out of places for princesses to be. Maybe a princess in space?

Have we hit peak princesses?  What about the seldom discussed LGBQT princesses . . . like fracking for Disney, is this is a potential untapped reserve?
Title: Re: Can't beat an Index
Post by: forummm on May 21, 2015, 08:15:20 AM
They also need more princesses. They've already done princesses under the sea, in a swamp, in the snow, in a tower, in a library, in a coma, in Arabia, etc. They are running out of places for princesses to be. Maybe a princess in space?

Have we hit peak princesses?  What about the seldom discussed LGBQT princesses . . . like fracking for Disney, is this is a potential untapped reserve?

They did venture out into black princess. And public sentiment has shifted dramatically. Maybe this is the next frontier.
Title: Re: Can't beat an Index
Post by: Financial.Velociraptor on May 21, 2015, 09:15:04 AM
They also need more princesses. They've already done princesses under the sea, in a swamp, in the snow, in a tower, in a library, in a coma, in Arabia, etc. They are running out of places for princesses to be. Maybe a princess in space?

Have we hit peak princesses?  What about the seldom discussed LGBQT princesses . . . like fracking for Disney, is this is a potential untapped reserve?

They did venture out into black princess. And public sentiment has shifted dramatically. Maybe this is the next frontier.

Give me my Ru Paul Disney movie!
Title: Re: Can't beat an Index
Post by: wordnerd on May 21, 2015, 05:21:33 PM
They also need more princesses. They've already done princesses under the sea, in a swamp, in the snow, in a tower, in a library, in a coma, in Arabia, etc. They are running out of places for princesses to be. Maybe a princess in space?

Have we hit peak princesses?  What about the seldom discussed LGBQT princesses . . . like fracking for Disney, is this is a potential untapped reserve?

They did venture out into black princess. And public sentiment has shifted dramatically. Maybe this is the next frontier.

Give me my Ru Paul Disney movie!

I'd watch that movie! I wouldn't pay full-price for it or anything crazy like that, but I'd definitely watch that.